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Vital Energy Raises Production Outlook and Capital Spending with Significant Permian Basin Acquisition
07/31/2023
Vital Energy’s deal adds 24,000 net acres and 100 gross drilling locations in Texas, growing its Permian Basin footprint to around 198,000 net acres.
Vital Energy is revising its projections for oil and gas production and capital spending upward following the successful acquisition of a substantial area in the Permian Basin. The company has gained around 24,000 net acres and 100 gross drilling locations in Texas. As a result of this deal, Vital Energy is now increasing its full-year production and capital spending guidance.
Vital Energy Completes $391.6M Acquisition of Forge Energy II
Tulsa-based Vital Energy finalized its acquisition of Forge Energy II Delaware LLC on June 30, as reported in a July 11 news release. The transaction involved a cash payment of $391.6 million, securing 70% ownership of Forge's assets, with adjustments made for closing price.
In a collaborative effort with Minnesota-based Northern Oil & Gas Inc., Vital Energy obtained Forge's assets through a joint deal. Vital Energy assumed operational control of the acquired assets with a 70% stake, while NOG acquired the remaining 30% for $167.9 million in cash.
This acquisition contributes approximately 24,000 net acres and an additional 100 gross drilling locations situated in Pecos, Reeves, and Ward counties, Texas. With this expansion, Vital Energy's footprint in the Permian Basin now spans around 198,000 net acres.
Oil and gas production outlook
After acquiring Forge and surpassing production projections for the first half of 2023, Vital is raising its oil and gas production outlook.
- Total production is now estimated at 82,000 boe/d to 86,000 boe/d, up from the previous 76,000 boe/d to 80,000 boe/d.
- Crude oil production is expected to rise to 40,000 bbl/d to 43,000 bbl/d from the earlier 36,300 bbl/d to 39,300 bbl/d.
Vital plans to use a single drilling rig and bring five wells online in the recently acquired Delaware Basin acreage to boost production. The company has allocated an additional $50 million in its capital spending budget for these efforts. The revised full-year capital spending forecast is now $675 million to $725 million, highlighting Vital's commitment to expanding its presence and optimizing production in the oil and gas market.
In the latter half of 2023, Vital intends to utilize a single drilling rig and activate five wells on the Delaware Basin acreage acquired from Forge. To support the development of these newly acquired assets, Vital has allocated an additional $50 million in its capital spending budget. Consequently, the company's full-year capital spending forecast has been adjusted to range between $675 million and $725 million, reflecting an increase from the original guidance of $625 million to $675 million.
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Chevron Announces Intent to Divest Oil and Gas Properties in New Mexico and Texas
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According to Reuters, Chevron has recently made additional assets available for acquisition in both New Mexico and Texas. As part of its strategy to streamline operations following significant shale acquisitions, Chevron is reportedly offering multiple oil and gas properties for sale in New Mexico and Texas. Marketing documents reviewed by Reuters reveal the company's intention to divest these assets. Despite its prominent position as the largest publicly-traded oil and gas producer and property owner with 2.2 million acres in the Permian Basin of West Texas and New Mexico, Chevron has been actively divesting properties in the region. This divestment aligns with Chevron's efforts to optimize its portfolio and focus on its core operations.
Civitas Makes $4.7B Entry into Permian Basin
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Civitas Resources Expands into Denver-Julesburg Basin through $4.7B Cash and Stock Deals for NGP's Tap Rock and Hibernia. Civitas Resources has recently secured two definitive agreements to expand its presence in the Permian Basin's Midland and Delaware basins. The company will achieve this expansion through the acquisition of two private exploration and production companies, namely Hibernia Energy III LLC and Tap Rock Resources LLC. The total value of the deal, paid in both cash and stock, amounts to $4.7 billion. Both Hibernia Energy III LLC and Tap Rock Resources LLC are supported by NGP Energy Capital Management LLC. These acquisitions reflect the increasing demand for oil and gas reserves in the Permian Basin, with companies specializing in the region actively seeking new opportunities. Currently, Civitas Resources' primary production operations are focused in the Denver-Julesburg Basin (D-J Basin).
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Rangeland Energy has agreed to sell Rangeland Midstream Canada to Kingston Midstream Alberta and remains committed to future Canadian midstream investments. Texas-based Rangeland Energy, supported by financial partner EnCap Flatrock Midstream, has inked a deal to sell its Canadian subsidiary, Rangeland Midstream Canada Ltd., to Calgary's Kingston Midstream Alberta Ltd. for cash.
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The merger between ONEOK and Magellan received approval from Magellan shareholders, securing just 55% of the total votes at Magellan’s meeting on Sept. 21. ONEOK Inc. has successfully concluded the acquisition of Magellan Midstream Partners LP on Sept. 25. The deal will bring together their respective assets and expertise, resulting in a powerful entity boasting an extensive network of approximately 25,000 miles of pipelines primarily focused on transporting liquids.
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Viper Energy's deal, comprised of cash and equity, secures an additional 2,800 net royalty acres in the Midland Basin and 1,800 in the Delaware Basin. Viper Energy Partners LP, a Diamondback Energy Inc. subsidiary, has inked a deal to acquire mineral and royalty interests in the Permian Basin. The deal, valued at around $1 billion, is with Warwick Capital Partners and GRP Energy Capital. Viper was established by Diamondback with the purpose of owning, purchasing, and capitalizing on oil and natural gas assets in North America, specifically targeting mineral and royalty interests.