Freehold Royalties Ltd. entered into agreements with two private sellers to acquire Permian Basin mineral and royalties interests in the Midland and Delaware basins for CA$112 million ($US82.5 million), the company said on Dec. 11.

The assets, primarily in Martin County, Texas, consisted of 2,670 net royalty acres that the Canadian company said were primarily in the “core of the Midland Basin.” Freehold forecast the assets will add an average 600 boe/d in the U.S. in 2024 and generate CA$15 million (US$11.05 million) in funds from operations at current commodity prices.

The deal increases Freehold’s Permian position by 40% and its U.S. drilling inventory by 25%, Freehold said in a Dec. 11 news release.

More than 40% of the acquired assets’ net royalty acres are undeveloped, providing significant future potential for development, Freehold said. Overall, the Permian production will increase Freehold’s volumes in the basin by approximately 30% and, in the U.S. overall, by 12%.

The company described the acquisition as adding more than 2,000 gross development locations to its inventory. That would bring Freehold’s reported U.S. inventory to more than 10,000 gross locations, the company said.

“This implies approximately 17-years of drilling inventory based on 2022 drilling levels,” Freehold said in a Dec. 11 news release.

Freehold will fund the acquisitions using its existing credit facility. The transactions are expected to close in January 2024, the company said. Freehold will provide an update on its 2024 guidance as part of its 2023 year-end operating and financial results, which are expected to be released after market close on Feb. 28, 2024.

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