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Evolution Petroleum Corp. closed on its previously announced acquisition of non-operated oil and natural gas assets in New Mexico, Texas and Louisiana on April 14.
The deal adds approximately 440 net boe/d of low decline production (60% oil, 40% natural gas) to its portfolio.
The assets have $13 million in proved and developed PV-10, Evolution said in the press release for the deal’s close. When the deal was first announced in March, Evolution touted a PV-10 of $15 million for the assets.
The assets have a valuation of approximately 3.4x estimated next 12 months adjusted EBITDA based on current strip pricing, Evolution said on April 14.
"Despite recent commodity price and market volatility, our TexMex transaction remains highly accretive to both near-term and long-term cash flows and directly supports our core objective preserving and enhancing the long-term sustainability of our dividend,” President and CEO Kelly Loyd said. “Our negotiated deal represents a significant discount to PV10 at the current strip and, due to its low-decline nature, should only get better if oil prices move back up to a more normalized price range."
The acquisition was funded through cash on hand and borrowings under its existing credit facility. The deal has an effective date of Feb. 1.
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