Another takeover in the oil and gas industry. Earthstone Energy, Inc. announced its $950 million acquisition of Sabalo Holdings, LLC based in Corpus Christi, Texas.
The deal includes nearly 21,000 acres in the Midland Basin as well as 488 gross operated horizontal drilling locations and another 349 non-operated locations. Earthstone acquired the assets with $650 million in cash and $300 million in stock.
Most of the holdings are in Howard County, Texas where Sabalo has had a two-rig drilling program.
The Sabalo Acquisition represents a large, contiguous acreage position with a deep inventory of favorable economic drilling locations and significantly expands Earthstone’s footprint in the Midland Basin. The Sabalo Acquisition is expected to close in late 2018 or in the first quarter of 2019, subject to the satisfaction of customary closing conditions, including the approval of Earthstone’s stockholders.
Robert J. Anderson, President of Earthstone, commented, “The Sabalo Acquisition is an important milestone in our ongoing transformation into a premier Midland Basin focused operator. We have delivered on our goal, as stated after our 2017 acquisition of Bold, to significantly increase our operated acreage and inventory of highly economic locations.”
He said the Sabalo acquisition increases Earthstone’s footprint in the Midland Basin by 69%.
“Sabalo’s continuing two rig development program has created significant momentum and driven over a 300% increase in its oil production over the last 12 months. We expect production to continue to increase and our plan is to maintain those two rigs and the single rig we have been operating on our southern Midland Basin acreage since May, 2017. We have a clear line of sight toward being cash flow positive in 2020,” said Mr. Anderson.
