U.S. Energy Development Corp. continues to grow its footprint in the Permian Basin through recent acquisitions in “attractive projects” close to the Texas and New Mexico state lines.

On Feb. 23, U.S. Energy Development said it had acquired interests in the Shetland and WarWink oil development projects in the Permian Basin. The deal follows the acquisition by U.S. Energy last September of an $8.5 million interest in a Permian project operated by Shell Oil Co. in Loving County, Texas.

The Shetland and WarWink projects are located in the Delaware Basin in New Mexico’s Eddy County and Texas’ Winkler County. Jordan Jayson, chairman and CEO of U.S. Energy, described both projects as “instrumental” in the company’s continued growth and expansion in the Permian Basin.

“These projects offer favorable valuations, desirable locations and strong projected returns,” Jayson said in a statement on Feb. 23. “They rank amongst the most attractive projects we have seen in our 40 year history.”

U.S. Energy Development is a privately held oil and gas operator established in 1980 which provides direct investments in energy. Based in Arlington, Texas, the firm has invested in, operated and/or drilled more than 2,400 wells in 13 states and Canada and deployed more than $1.5 billion on behalf of its partners, according to its company release.

“We look at over 300 deals on an annual basis, and this year’s been no exception,” Jayson told Hart Energy in an interview last year. “We’ve seen great opportunities and we’ve been approached by several companies—large and small—for potential joint venture opportunities.”

Over the past year, U.S. Energy has deployed more than $100 million in new projects, the company release on Feb. 23 said.

U.S. Energy did not disclose the seller or financial terms for the acquisition of additional interests in the Shetland and WarWink projects announced on Feb. 23.

The Shetland project is located in Eddy County and contains an interest in 14 producing wells and six recently proposed oil wells targeting IP in mid-2021. Located in Winkler County, the WarWink project contains an ownership interest in two oil wells also targeting IP in mid-2021.

According to U.S. Energy, the Shetland project is also located in an “opportunity zone,” which provide additional tax benefits to investors.

In addition to the traditional tax benefits oil and gas projects receive, U.S. Energy said opportunity zones also allow qualified investors to defer short or long-term capital gains, receive 10% of their deferral tax free, while also qualifying for tax-free gains on investments held longer than 10 years.

Some of the best areas for oil and gas production are located in opportunity zone census tracts, according to Matthew Iak, executive vice president of U.S. Energy.

“The combination of opportunity zones and oil and gas investments couldn’t have happened at a better time,” Iak said in a statement on Feb. 23. “The only thing better for investors than cash flow, is cash flow that is potentially tax free.”

U.S. Energy Development is active in all major US basins and currently maintains approximately 300,000 gross acres HBP for potential future oil and natural gas development. In 2020, the company deployed over $93 million in capital which includes $40 million in fast cycle, high-grade nonoperated projects and $53 million in operated projects in the Permian and Eagle Ford, according to its website.

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