U.S. Energy Development Corp. (USEDC) plans to keep at least one rig operating for the next five years on the Concho Resources property it picked up in March from ConocoPhillips.
The seller of the Delaware Basin leasehold, revealed to be the North Harpoon play area, hadn’t been disclosed previously. ConocoPhillips bought Concho for $9.7 billion in 2021.
Jake Plunk, USEDC senior vice president, A&D, described the deal to investors, analysts and financiers at the recent EnerCom Denver conference.
The purchase price was $390 million, privately held USEDC had disclosed in April.
ConocoPhillips reported this month in a Securities and Exchange Commission filing that it sold some Lower 48 property earlier this year for net proceeds of $581 million. It didn’t describe where the property was.
USEDC reported at EnerCom that it’s made $580 million of acquisitions so far in 2025 after looking at more than $3 billion of property.
USEDC’s roughly 20,000-net acre addition to its interests in Reeves and Ward counties, Texas, was a “landmark transaction” and “the largest single acquisition in the company's 45-year history,” the E&P had reported in the April 15 deal announcement.
It plans to spend up to another $1 billion more in the next 12 months to 18 months after doing $850 million of acquisitions in 2024.
Deals it wants are up to $500 million and can be drilling deals, PDP, or both.
Headquartered in Fort Worth, Texas, its property includes operated and non-operated interests in eight basins involving more than 65 operator partners. Its E&P interests involve more than 2,000 wells.
Current net production across its portfolio is some 54,000 boe/d.
North Harpoon
According to Texas Railroad Commission (RRC) data, USEDC picked up a total of 87 leases in Ward and Reeves counties in April, bringing its total there to 105.
The E&P had operated only in the Phantom-Wolfcamp Field in Reeves until March when it added the Wolfbone Trend Area Field.
In April from ConocoPhillips, the RRC data show it added more property in Phantom-Wolfcamp and Wolfbone Trend as well as entry-level interest in the Hoefs T-K (Wolfcamp) Field and Two Georges (Bone Springs) Field.
Leases it gained in Reeves total more than 40, including what was Concho’s Jack State A, Jim Keith A 6-3, Hollywood and Iceman units.
In Ward County, it picked up Arco-State 33-28, Barstow 34 173, Watcha Want A and Watcha Want B, as well as 13 other producing leases.
USEDC’s operated production from Texas grew from 3,085 bbl/d of oil, 537 bbl/d of condensate and 13.7 MMcf/d of gas in March to 12,163 bbl/d of oil, 1,503 bbl/d of condensate and 64.2 MMcf/d in June, according to the RRC.
Most of its Texas production is from Reeves and Ward counties, while 11% of the oil and a small amount of the gas is from South Texas in Frio and Zavala counties.
Jump ball
Plunk said of the Delaware deal, “when that asset came on the market, we took a look at ourselves and said, ‘this is an asset that could be a really transformational acquisition for us.’
“It gives us a lot of things. It gives us scale. It gives us a bigger presence in the basin. It also gives us the ability to control our own inventory as we raise capital.”
Deploying capital can be timed as the operator “a lot better rather than being a non-operated partner.”
USEDC was also interested in gaining the data that came with the leasehold.
“And the other thing is there aren’t that many opportunities this day and age to just go out and buy 20,000 acres,” he said, much less property that is also “mostly HBP in a really prolific basin like the Delaware.”
“So for that reason, we were willing to lean in. It was a competitive process, but we kind of wanted to jump ball here and we're super excited.”
The property was too PDP-weighted for a private equity-backed startup.
“But it still had enough drilling [locations] on the existing acreage that you couldn't just buy it for PDP value,” he said. “You had to put a material amount of money on the acreage.”
Since taking title, USEDC has brought on wells that had been offline.
“We added production from Day One. And we've been able to maintain that with just an active workover program.”
The E&P has one rig drilling a three-well pad just west of North Harpoon that will move to the new leasehold next.
“We're just stacking up deals where it's giving us a lot of wellbore diversity,” Plunk said.
“You're not going to get knocked out by one punch. It spreads the risk around the portfolio.”