It was announced over the weekend that Concho Resources Inc, has entered into a definitive agreement to acquire all the oil and natural gas assets of Three Rivers Operating Company and certain affiliated entities for $1 billion in cash.
Three Rivers is a privately-held exploration and production company with approximately 310,000 gross (200,000 net) acres in the Permian Basin, including large positions in the Company's core northern Delaware Basin play, the Midland Basin Wolfberry play, and the emerging southern Midland Basin horizontal Wolfcamp and Cline shale plays.
Concho intends to finance the acquisition with borrowings under its $2.0 billion credit facility, which had approximately $1.8 billion available to be borrowed as of March 31, 2012. In addition, the Company plans to divest $200 million to $400 million of certain non-core assets from the acquisition and its existing assets over the next nine months.
Timothy A. Leach, Concho's Chairman, CEO and President, said "Combined with our existing portfolio, these assets give the Company nearly 750,000 net acres across the Permian Basin, with exposure to some of the most exciting oil plays in the U.S. We look forward to accelerating development on these assets and executing the same strategy of delivering return-driven, high-margin growth to our shareholders over the next several years."
In connection with the acquisition, the Company has entered into crude oil swaps on 2.4 million barrels of oil at a weighted average price of $92.90 per barrel for the remainder of 2012 through 2017.
The acquisition is expected to be immediately accretive to earnings, discretionary cash flow, production and reserves on a per share basis and provides an additional platform to significantly grow production in the Permian Basin. An expected closing date of July 2012 has been given for the acquisition, subject to certain preferential rights to purchase and other customary purchase price adjustments.
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