![Colgate Energy Continues Permian Expansion with $190 Million New Mexico Bolt-on](/sites/default/files/styles/hart_news_article_image_640/public/image/2021/11/colgate-energy-continues-permian-expansion-190-million-new-mexico-bolt.jpg?itok=JkLPY1VJ)
Pro forma for the Nov. 7 deal, Colgate’s position in the Permian Basin will cover roughly 108,000 net acres with estimated current net daily production of 62,000 boe/d. (Source: Hart Energy)
Colgate Energy Partners III LLC entered a definitive agreement with an undisclosed seller on Nov. 7 to purchase approximately 22,000 net acres directly offset Colgate’s existing position in New Mexico’s Eddy and Lea counties for $190 million.
“Given the depth of our current inventory, we have a very high bar for acquisitions and this one was just too good to pass up,” Will Hickey, co-CEO of Colgate, commented in a company release.
The deal marks the third acquisition for privately held Colgate Energy so far this year. Previously, the company completed two acquisitions in the southern Delaware Basin in West Texas—first, with its all-stock acquisition of Luxe Energy followed by a $508 million cash acquisition of acreage in Reeves and Ward counties, Texas, from Occidental Petroleum Corp.
“Building on the transformative transactions completed earlier this year in Texas, this New Mexico acquisition adds to Colgate’s position as one of the premier private operators in the Permian Basin,” James Walter, co-CEO of Colgate, said in the release.
![Pro Forma Colgate Energy Partners New Mexico Acreage Map](/sites/default/files/inline-images/Pro%20Forma%20Colgate%20Energy%20Partners%20New%20Mexico%20Acreage%20Map.jpg)
Based in Midland, Texas, Colgate Energy was founded in 2015 by Walter and Hickey with initial equity commitments from Pearl Energy Investments and NGP. Pro forma for the Nov. 7 deal, Colgate’s position in the Permian Basin will cover roughly 108,000 net acres with estimated current net daily production of 62,000 boe/d.
In his statement, Hickey also noted that the latest acquisition directly offsets its legacy Parkway operating area in the Northern Delaware Basin where Colgate has recently drilled some of the best wells in company history.
The acquisition adds over 200 “high-quality locations,” according to the company release.
The acquired acreage has an average 8/8ths net revenue interest of over 80% and is over 95% operated with a 78% average working interest. Current estimated average net daily production from the assets is roughly 750 boe/d.
Colgate expects to finance the acquisition through a combination of cash on hand, borrowings on its revolver and/or other potential debt financing.
“Colgate’s strong balance sheet and ample liquidity allows us to execute a cash transaction of this size while continuing to target 2022 leverage of less than 1.0x,” Walter added.
The effective date of the transaction is Sept. 1, and closing is expected to occur in first-quarter 2022.
Recommended Reading
EQT Closes $5.45B Acquisition of Equitrans Midstream
2024-07-22 - In addition to integrating Equistrans’ midstream assets, EQT will focus on reducing the infrastructure company’s debt of between $7.6 billion and $8 billion. Including equity and debt, the deal is valued at roughly $13 billion.
Ecopetrol in Discussions with Oxy to Buy $3.6B Stake in CrownRock
2024-07-19 - Occidental Petroleum is in talks with joint venture partner Ecopetrol SA to acquire a 30% stake in CrownRock LP for approximately $3.6 billion, according to regulatory filings.
Exxon Mobil Selling Malaysia Oil, Gas Assets to Petronas - Sources
2024-07-19 - Exxon Mobil, which last year marked its 130th year in Malaysia, has been trying to sell its upstream assets in the country since 2020.
The $22.5B Deal: How ConocoPhillips Won Marathon Oil in 33 Days
2024-07-19 - ConocoPhillips didn’t show up until April 25, while two other unidentified public E&Ps were bidding for Marathon, according to a filing with the Securities & Exchange Commission.
Seadrill Sells Three Jackups for $338MM to Gulf Drilling International
2024-05-17 - Seadrill Ltd. is also selling its 50% equity interest in the joint venture that operates the rigs offshore Qatar.