Editor's note: This is a developing story. Check back later for more details.
Civitas Resources is acquiring oil producing assets in the Permian’s Midland Basin for approximately $2.15 billion from Vencer Energy, a Vitol investment, the company announced in an Oct. 4 press release.
The acquisition increases Civitas’ Permian Basin scale by adding approximately 44,000 net acres in Midland with a current production of 62 Mboe/d (50% oil). The 400 gross development locations are located primarily in the Spraberry and Wolfcamp formations.
The deal is expected to close in January 2024 and will be effective as of Jan. 1, 2024.
The 44,000 acres were acquired by Vencer in 2021 from Hunt Oil for an undisclosed sum that is estimated to have been some $1.4 billion. Production from the property at the time was approximately 40,000 boe/d. Vencer grew that to 62,000 boe/d and flipped the asset for a roughly $500 million return, net of investment.
Total consideration for the transaction is $2.15 billion, consisting of 7.3 million shares of common stock to be issued to Vencer and $1.55 billion of cash, of which $1 billion will be due at closing. The remaining $550 million will be payable on Jan. 3, 2025. If Civitas chooses to accelerate the deferred cash payment to the closing date of the deal, the total purchase price would be lowered by $50 million to $2.05 billion.
Civitas plans to fund the deal with a combination of debt and equity financings.
Ben Marshall, head of Vitol Americas, in a press release thanked Vencer founder and CEO Don Dotson and the Vencer team for the 3.5-year job, which was to procure an asset, then grow it to sale. "Vitol remains enthusiastic about the upstream sector and we are committed to deploying more capital in this space."
The firm is looking for more opportunities, he added. "We actively continue to look for more assets to add to our portfolio, whether it be through VTX Energy or via a new platform."
Led by build-and-flip veteran Gene Shepherd, Vitol-backed VTX Energy is developing an acreage portfolio in the southern Delaware Basin.
BofA Securities is serving as lead financial adviser for the deal. J.P. Morgan Securities LLC and RBC Capital Markets are also providing financial advice. Kirkland & Ellis is serving as legal adviser, and DrivePath Advisors is serving as communication adviser for Civitas. Vencer was advised by Latham & Watkins LLP.