Colgate Energy Partners III LLC has entered into a definitive agreement under which Colgate will acquire a majority of the assets owned by Luxe Energy LLC in an all-stock transaction, the company said June 2.

Luxe will continue to own and manage certain assets including a portion of the non-operated leasehold interests that are operated by MDC Reeves Energy LLC and its affiliates. Closing occurred simultaneously with signing of a definitive agreement on June 1, 2021.

Pro Forma Acreage Map (TX Zoom-In) (Graphic: Business Wire)

Pro Forma Acreage Map (TX Zoom-In) (Source: Business Wire)

Luxe currently holds roughly 22,000 net acres adjacent to Colgate’s existing position in Reeves and Ward Counties. The company has a net daily production of about 17,000 boe/d and roughly 5,000 gross surface acres that support go-forward development with 1 rig running focused on its existing Ward County position.

The acquisition will create one of the largest private companies in the Permian Basin, with around 57,000 net acres, roughly 45,000 boe/d and 4 rigs running as of June 1, 2021. The deal adds meaningful operational scale and synergies, which will build on Colgate’s track record of successful, low-cost execution and adds high-quality inventory directly offset Colgate’s successful legacy development in Reeves and Ward Counties.

“The acquisition of Luxe is a transformational event that positions Colgate as one of the largest private companies in the Permian. It allows both Colgate and Luxe stakeholders to take advantage of increased scale while generating substantial free cash flow. This transaction enhances our already best-in-class balance sheet and puts us in a position of strength as we look to opportunistically pursue further consolidation,” James Walter, co-CEO of Colgate, said.

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