Concho Resources has reached a definitive agreement to acquire approximately 24,000 gross (16,400 net) acres in the northern Delaware basin for approximately $430 million.

The acquired acreage is complementary to the company’s leasehold position in the northern Delaware basin, with approximately 12,000 gross (10,000 net) acres located in the Red Hills area in Lea County, New Mexico. The acquisition includes approximately 2,500 boed (69% oil) of current production.

Tim Leach, chairman, CEO and president, said, “This transaction is an opportunistic bolt-on in the Red Hills area where we are consistently delivering strong well performance. Our evaluation provides for multiple opportunities to enhance value through increased density development on multi-well pads as well as additional zones beyond the Avalon shale, Wolfcamp shale and the emerging Wolfcamp Sands.”

The Red Hills area is an oil-prone fairway generating exceptional returns at current commodity prices. With more than 5,000 ft of resource-rich hydrocarbon column, this area is highly prospective for multi-zone development. The acquisition more than doubles the company’s long-lateral drilling inventory in Red Hills and enhances its ability to drill long laterals on existing Concho leasehold.

The acquisition is expected to close in January.

Source: www.worldoil.com