Tulsa’s Laredo Petroleum, Inc. has expanded its holdings in the Permian Basin, announcing the closing on acquisition of 4,475 contiguous acres in West Texas.
The $65 million deal involves land near Garden City, Texas as company leaders say will “improve the company’s capital efficiency and enhance free cash flow generation.”
The acquisition was funded with Laredo’s $1 billion senior secured credit facility resulting in outstanding borrowings of $245 million on Dec. 6, 2019.
The new holdings have current net production of 1,400 barrels of oil equivalent a day and 55 percent is oil. There are also approximately 45 total gross expected locations across the Lower Spraberry, Upper Wolfcamp and Middle Wolfcamp formations.
The company explained the more than 4,400 acres are located in an area of high oil productivity.
“”We are excited to announce another acquisition that delivers on our strategy of shifting our development to oilier, more capital-efficient acreage,” stated Jason Pigott, President and Chief Executive Officer. “This acquisition expands our Glasscock County position further to the west into an area of higher oil productivity than our established acreage position.”
Laredo will also use the new acquisition to meet HBP or held by production obligations in 2020 and 2021.
“This acquisition enhances our ability to generate combined high-single digit oil growth and Free Cash Flow through 2022,” continued Pigott. “We remain committed to maintaining a competitive leverage ratio and expect to utilize our Free Cash Flow to pay down our revolver as we pursue a disciplined, accretive acquisition strategy.”