Concho Resources, headquartered in Midland, Texas announced it is selling its New Mexico Shelf assets in a $925 million deal with an affiliate of Spur Energy Partners LLC.
The divestiture includes approximately 100,000 gross acres. Current production from the Company’s Shelf assets is approximately 25 thousand barrels of oil equivalent per day. Following the sale, Concho will maintain a large presence and development program in southeastern New Mexico and will continue to support the local communities in which its employees live and work.
In addition, the Company’s board of directors authorized the initiation of a repurchase program of up to $1.5 billion of the Company’s shares of common stock.
“Divesting our New Mexico Shelf position enables us to accelerate the value of these legacy assets, while focusing our portfolio on opportunities with the highest potential for strong returns,” said Tim Leach, Chairman and CEO. “Further, the transaction reduces our cost structure and allows us to achieve the leverage target we communicated earlier this year, while delivering additional returns to shareholders under an initial $1.5 billion share repurchase program.”
The Company intends to use the proceeds from the transaction to pay down borrowings on its revolving credit facility and initiate the share repurchase program.
The transaction is subject to customary terms and conditions and is expected to close in November 2019.