Tulsa’s Vital Energy, Inc. just expanded its Permian Basin holdings in partnership with Northern Oil and Gas, with an all-cash $1.1 billion acquisition of the assets of Point Energy Partners, a Vortus investments portfolio company.
The announcement indicated the deal “will significantly increase the company’s operational scale and footprint in the Delaware Basin and add high-value development inventory. Under the terms of the agreement, the two companies will acquire Point Energy’s assets in an all-cash transaction for total consideration of $1.1 billion.
Vital Energy agreed to acquire 80% of Point’s assets, with NOG acquiring the remaining 20%. The transaction is expected to close by the end of the third quarter of 2024 with an effective date of April 1, 2024, subject to customary closing conditions.
The transaction is expected to add 68 gross inventory locations (49 net) with an estimated average breakeven oil price of $47 per barrel NYMEX WTI. The assets include approximately 16,300 net acres and net production of approximately 30.0 thousand barrels of oil equivalent per day (“MBOE/d”) (67% oil), as of the effective date.
Over the past 15 months, Vital Energy has built a high-quality, core operating position in the Delaware Basin, complementing its substantial Midland Basin leasehold. This transaction will increase the Company’s Delaware Basin position by approximately 25% to 84,000-net acres. Post closing, the Delaware Basin will comprise more than one third of the Company’s oil production.
“This bolt-on is a great fit for us, adding high-value inventory and production in the heart of our core operating areas. Furthermore, it expands our growing Delaware Basin position and balances our Permian operations,” said Jason Pigott, President and Chief Executive Officer.
“We expect to continue to demonstrate our ability to capture, integrate and create substantial value on acquired assets through optimized development plans, lower capital costs and proven operating practices, resulting in higher future cash flows.”
Vital Energy expects to fund its $820 million portion, net of expected purchase price adjustments, through the use of its credit facility, which was recently expanded to $1.5 billion. Wells Fargo, National Association has committed to the increased elected commitment upon closing of the transaction.
Closing price adjustments are expected to total approximately $75 million, reducing total consideration to approximately $1.025 billion.
With moderated activity levels and natural declines, fourth-quarter 2024 production on the Point asset is expected to average approximately 15.5 MBOE/d (64% oil). Vital Energy expects to invest approximately $45 million on the new properties during the fourth quarter of 2024, operating one drilling rig and completing seven wells.
The Company estimates a one rig development program would facilitate the drilling and completion of 12 wells over a 12-month period, resulting in total production of approximately 15.0 MBOE/d (64% oil) and capital investments of approximately $100 million.
