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Under the terms of the transactions, Civitas has agreed to
purchase a portion of Tap Rock Resources' Delaware Basin assets
and all of Hibernia Energy III's Midland Basin assets.
Both Tap Rock and Hibernia are portfolio companies of funds
managed by NGP.
Reuters was the first to report that Civitas was in advanced
talks with NGP to buy the Permian Basin-focused assets.
Permian is an obvious target for producers looking to increase
their inventory. The shale patch, which lies between Texas and
New Mexico, has the necessary infrastructure and is known for
high productivity and large undeveloped reserves.
Denver-based Civitas currently operates on more than 500,000 net
acres and produces roughly 160,000 barrels of oil equivalent per
day (boed).
The transactions would increase Civitas' existing production by
60%, the company said.
The acquisition of the "attractively priced, scaled assets in
the heart of the Permian Basin" would lead to increased free
cash flow and enhanced shareholder returns, according to Civitas
Chief Executive Chris Doyle. "We will soon have nearly a decade
of price-resilient, high-return drilling inventory."
High inflation and greater focus on investor returns had limited
shale supply growth in the past year, but HSBC analysts expect
shale oil supply to grow at the fastest pace in four years in
2023, with the Permian Basin likely being a key driver.
Plenty of tier-1 acreage still available, indicating shale oil
production will grow through to the end of this decade, HSBC
analysts wrote in a June 20 note.
The deals are expected to close in the third quarter of 2023.
(Reporting by Mrinalika Roy in Bengaluru; Editing by Shilpi
Majumdar)
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