Civitas Resources is offloading non-core interests in Colorado as the company prioritizes investment in the Permian Basin.
Civitas divested $85 million of non-core acreage in the Denver-Julesburg (D-J) Basin during the fourth quarter—primarily non-operated interests with minimal production, the Denver-based company reported in earnings after markets closed Feb. 27.
The company remains on track to reach a $300 million divestment target by the middle of the year.
Civitas has been cleaning up its portfolio in Colorado and plowing billions of dollars into deals in the Permian Basin—the nation’s top oil-producing region.
The company plans to deploy roughly 60% of its total investment into the Permian this year, with the remaining 40% earmarked for the D-J Basin.
Last year, Civitas made a splashy entrance into the Permian with nearly $7 billion in M&A.
The first pair of deals signed with NGP-backed privates Hibernia Energy III and Tap Rock Resources delivered assets in the Delaware Basin. Civitas agreed to pay $4.7 billion in cash and stock.
Civitas announced a second Permian deal in October—a $2.1 billion acquisition of Vencer Energy, backed by global commodities trading house Vitol. The Vencer transaction adds interests in the Permian’s Midland Basin.
“As our D-J Basin asset continues to outperform, we were successful in strategically expanding our portfolio over the last year by capturing accretive acquisitions that provide us with important scale and diversification in another world-class unconventional basin, the Permian,” Civitas CEO Chris Doyle said in the earnings release.
D-J Basin production averaged 173,000 boe/d during the fourth quarter; Permian Basin volumes averaged in at 106,000 boe/d for the quarter.
Civitas plans to drill and complete between 130 and 150 gross Permian wells in 2024; between 90 and 110 gross wells are planned for the D-J.
Civitas was born in 2021 through the combination of three Colorado E&Ps: Bonanza Creek Energy, Extraction Oil & Gas and Crestone Peak. At the time of the merger, Civitas was the largest pure-play producer in Colorado.
As Civitas looked for scale through M&A, it needed to look outside of Colorado, Doyle told Hart Energy in an exclusive interview last year. Most of the quality D-J Basin acreage was already owned by a small group of public E&Ps, including Chevron, Occidental, PDC Energy and Civitas itself.
The D-J consolidated even more when Chevron bought PDC for $6.3 billion last year.
RELATED: Shale Outlook: Scarce Inventory to Drive Upstream M&A in ‘24