USA: Oil and Gas Acquisition Concho Resources to Take Over RSP Permian in All-Stock Transaction
The acquisition will add 92,000 net acres to Concho’s existing acreage in the Permian Basin. Also, the transaction has established one of the largest unconventional shale producers in the region.
Texas/USA – Concho Resources and RSP Permian have recently entered into a definitive agreement under which Concho will acquire RSP in an all-stock transaction valued at approximately 9.5 billion dollars, inclusive of RSP’s net debt. The consideration will consist of 0.320 shares of Concho common stock for each share of RSP common stock. The transaction was unanimously approved by the board of directors of each company.
The acquisition will add approximately 92,000 net acres that strongly complement Concho’s existing acreage position in the Permian Basin. The combined position will cover more than 640,000 net acres. In fourth-quarter 2017, production on RSP’s assets totaled approximately 55.5 thousand barrels of oil equivalent (Boe) per day on a two-stream basis, of which approximately 80 % was crude oil and 20 % was natural gas. The transaction adds 2.2 billion Boe of resource potential, of which more than two-thirds is premium resource.
The combined company will run the largest drilling and completion programme in the Permian Basin. With a focused portfolio and substantial scale advantage, the benefits of this transaction are expected to drive corporate level savings and operational synergies by combining the complementary assets and the technical skills of both company’s employees. Specific operational synergies include: asset optimization, directing capital to high-return manufacturing-style projects and utilizing shared infrastructure systems. The present value of corporate and operational synergies is expected to exceed 2 billion dollars.
The acquisition is expected to be accretive in the first year to Concho’s key per-share metrics, including net asset value, earnings, cash flow and debt-adjusted growth. In addition, the transaction is expected to enhance Concho’s three-year outlook for annualized production growth on a capital program within cash flow from operations.
The transaction, which is expected to be completed in the third quarter of 2018, is subject to the approval of both Concho and RSP shareholders, the satisfaction of certain regulatory approvals and other customary closing conditions.