Empire Petroleum Corp. expanded its portfolio of mature producing properties into New Mexico through the recent acquisition of a historic oil field from Exxon Mobil Corp. affiliate, XTO Holdings LLC.

The Tulsa, Okla.-based company acquired the assets comprising of producing oil and gas assets and related gathering assets located in the Eunice Monument and nearby Arrowhead Grayburg fields in New Mexico’s Lea County. The transaction added about 48,000 HBP acres of Permian leasehold plus approximately 1,100 net boe/d of production, with 67% being oil. 

“This acquisition is a terrific example of what Empire looks to manage in their assets: mature producing oil properties with predictable, long life production with significant upside potential,” Empire CEO Tommy Pritchard said in a statement on May 18.

Empire Petroleum is a publicly traded, oil and gas company targeting acquisitions of proved developed assets with synergies with its existing portfolio of wells in Texas, Louisiana, North Dakota and Montana.

Mike Morrisett, president of Empire, said that, with the closing of the XTO acquisition in New Mexico, Empire Petroleum now operates in five states, with an aggregate of over 100,000 net leasehold acres and roughly 1,800 net boe/d.

“In our view, these assets have current infill drilling and return-to-production well potential that should shortly enhance daily production,” Morrisett noted in a statement.

The Eunice Monument and Arrowhead Grayburg fields, known as EMSU and AGU, are located on the northwestern edge of the Permian Basin’s Central Basin Platform in southeastern Lea County approximately 15 miles southwest of the city of Hobbs in New Mexico.

According to Empire, the U.S. Geological Survey (USGS) estimates of known recoverable efficiency in the Eunice Field and surrounding satellites is close to 40%. Further, the USGS estimates primary and secondary recovery of 4.5 billion original oil barrels in place making Eunice Monument one of the largest fields in the U.S., the company release said.

“The pipeline of growth opportunities around EMSU and AGU remains robust, and we are currently evaluating additional deal flow with a focus on building scale in the Permian,” Pritchard added in his statement.

The majority of the field development of the Eunice Field, first discovered in 1929, occurred from 1934 through 1937 on 40-acre spacing. The field was produced under primary means until unitization of the field occurred in February 1985 as a secondary waterflood. Productive intervals at Eunice are mostly the Queen, San Andres and Grayburg formations, according to the release.

Empire paid $17.8 million for the XTO acquisition, a recent company filing said. In connection with financing of the acquisition, the company subsidiary, Empire New Mexico LLC, entered into a $16.25 million senior secured convertible note with Energy Evolution Master Fund Ltd. at 3.8% per annum interest.

“We thank our major and core shareholders in providing 100% of the capital to close this key accretive transaction for Empire,” Morrisett said. “We are also excited to have retained the existing sellers’ team that has successfully run the field for several years.”

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