A Midland, Texas company is taking over another Permian Basin operator in a $9.5 billion deal announced this week.
Concho Resources Inc. is acquiring RSP Permian Inc. in an all-stock transaction that will consist of 0.320 shares of Concho common stock for each share of RSP common stock.
The move allows Concho to expand its portfolio in the Permian Basin to nearly 640,000 acres. It also creates the largest crude oil and natural gas producer from the unconventional shale in the basin. Concho will also become the largest drilling program in the basin with 27 rigs.
Tim Leach, Chairman and Chief Executive Officer at Concho expects the newly-merged company will realize more than $60 million in annual corporate level savings.
“This combination allows us to consolidate premier assets that seamlessly fold into our drilling program, enhance our scale advantage and reinforce our leadership position in the Permian Basin, all while strengthening our platform for delivering predictable growth and returns.”
Concho’s acquisition adds nearly 92,000 acres. Fourth quarter 2017 production on RSP’s assets totaled nearly 55.5 thousand barrels of oil equivalent a day. The transaction adds 2.2 Boe of resource potential.
The transaction is expected to be completed in the third quarter of 2018, and is subject to the approval of both Concho and RSP shareholders. Upon closing, Concho’s board will b expanded to 11 directors.