QEP Resources Inc.’s (NYSE: QEP) footprint in the pricey Midland Basin grew a little larger June 21 as the company added hundreds of locations near its core.

The Denver company’s subsidiary, QEP Energy Co., entered a definitive agreement with multiple parties to acquire Permian assets for about $600 million. Concurrently, QEP also launched an underwritten public offering of 20 million shares of its stock to fund the purchase.

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The properties cover about 9,400 net acres in the northern Midland Basin in Martin County, Texas—98% of which is HBP to the base of the Wolfcamp Formation or deeper. Current net production is about 1,400 barrels of oil equivalent per day (boe/d), about 83% crude oil, from 96 vertical wells.

The deal includes more than 430 horizontal drilling locations over four horizons—the Wolfcamp A, Wolfcamp B, Middle Spraberry and Spraberry Shale—with additional potential in deeper and shallower horizons, the release said.

The acquisition is located about 10 miles east of existing QEP operations, where the company holds about 26,300 net acres with 62.3 MMboe of proved reserves.

The assets have about 76 MMboe net proved reserves and 275 MMboe total net recoverable resources, based on internal estimates. QEP is acquiring 96% average working interest in the assets subject to a 23% royalty burden.

“The acquisition adds significant drilling inventory in the core of the northern Midland Basin and broadens our footprint in a world-class crude oil basin,” said Chuck Stanley, chairman, president and CEO of QEP. “We believe this acquisition, combined with our existing crude oil assets, will enhance our crude oil production growth and improve our operating efficiency.”

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The deal advances QEP’s strategy of acquiring, developing and producing oil and gas from resource plays in its core operating areas and expanding into areas where it can capitalize on its operating and technical expertise, according to the release.

The transaction requires agreement from associated owners of the properties. The initial sellers have until July 13 to obtain executed joinders to the agreement from the associated owners.

The transaction is expected to close September, subject to customary closing conditions, with an effective date of April 1. Latham & Watkins LLP represented QEP in the transaction.

Emily Moser can be reached at emoser@hartenergy.com.

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