The state of New Mexico is anticipating more oil production to result from a $430 million deal by Texas-based Concho Resources to acquire land in the northern Delaware Basin in southeastern New Mexico.
Most of the land is located in the Red Hills area of Lea County and Concho’s president and chief executive Tim Leach says it will provide for an increase in the development of multi-well pads.
“With a continued focus on driving capital efficiency gains and actively managing our portfolio, this acquisition further strengthens our industry-leading position in the Permian Basin and reinforces our ability to deliver differentiated long-term growth,” said Leach in making the announcement.
He said Concho plans to increase its rig county in the Delaware Basin in the coming year and anticipates that production volumes will grow by nearly 20 percent.
New Mexico officials note that the state has fewer than 30 drilling rigs in the state but production for 2016 is still on pace to be close to last year’s record production.
“We have observed many companies positioning themselves for higher levels of future production through the purchase of new leases and acquisition of existing leases,” said Wally Drangmeister with the New Mexico Oil and Gas Association.
Concho’s announcement comes as federal scientists said they believe the Permian Basin could be home to billions of barrels of oil.