Consolidation in the Texas Oil Patch is gaining momentum this week after Dallas-based Matador Resources Co. agreed to acquire Advance Energy Partners Holdings LLC for about $1.6 billion in cash, the largest deal in Matador’s 20-year history.
The purchase of Advance, which is currently controlled by private equity firm EnCap Investments LP, is expected to be completed early in the second quarter, Matador said Tuesday in a statement. Matador also agreed to pay an additional cash consideration of $7.5 million for each month this year in which the average oil price exceeds $85 a barrel.
“Matador is very excited by this strategic bolt-on opportunity,” said Joseph Foran, the company’s founder, chairman and CEO. “We view this transaction as a unique value-creating opportunity for Matador and its shareholders.”
Matador shares were up 1.7% Tuesday to $63.45.
Advance had estimated production in the first quarter last year of 24,500 to 25,500 barrels of oil and natural gas equivalent per day, and has about 18,500 net acres in the northern Delaware Basin, which is part of the larger Permian Basin formation. The region — the largest and most productive U.S. Oil Patch — has long been a focus of consolidation because of its size and scale.
Foran said in a conference call Tuesday that he is bullish about the quality of acreage his company acquired. There have been concerns about dwindling inventory of top-tier well sites in West Texas.
The acquisition comes just a day after Fort Worth-based oil firm HighPeak Energy Inc., which also explores in the Permian Basin, said it was considering selling itself. It owns 110,000 acres in the Permian.
“The board and I believe now is an opportune time to capture the value we do not consider is presently reflected in our share price,” said HighPeak chairman and CEO Jack Hightower in a statement. “We have worked diligently over the last few years to secure this position and are poised to capitalize on the favorable energy market outlook.”
HighPeak’s shares opened at $26 Monday and closed at $28.40 Tuesday.
The Permian also saw Fort Worth-based TXO Energy Partners LP launch an initial public offering of 5 million shares with the price per share expected to be between $19 and $21. It’s expected to raise $100 million in the master limited partnership industry’s first IPO since 2019. Company shares will be traded on the New York Stock Exchange under the ticker symbol TXO.
TXO’s acreage is concentrated in the Permian and the San Juan Basin of New Mexico and Colorado. Its CEO is Bob Simpson, who founded XTO Energy and led it until the company merged with ExxonMobil in 2010 in a deal valued at $41 billion.
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