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Vital (Formerly Laredo) Expands in Midland, Purchases Acreage From Driftwood Energy03/10/2023
Vital Energy Inc. has made a significant acquisition, purchasing 11,200 net acres in Upton and Reagan counties, Texas. The deal, which involved a combination of cash and stock, was worth almost $214 million. This move comes shortly after the company's rebranding from Laredo Petroleum just one month ago.
According to the announcement made on February 14, Vital Energy has purchased the acreage from Driftwood Energy Operating LLC, which is now producing an average of 5,400 barrels of oil equivalent per day (63% oil) with a decline rate of 50% over the next 12 months. This purchase will extend Vital Energy's oil-weighted inventory life, adding 23 net operating horizontal drilling locations in the Wolfcamp B Formation, including four net DUCs.
The majority of the acreage, production, and inventory is situated in a contiguous leasehold in Upton, making it an excellent strategic fit for Vital Energy. The acquisition and sale agreement includes Driftwood's leasehold interests and hedges for $127.6 million cash and 1.57 million shares of Vital Energy stock.
Jason Pigott, Vital Energy's president, and CEO remarked on the acquisition's financial benefits, which are accretive on key financial metrics, leverage neutral, and extend the company’s proven track record of completing disciplined transactions that add value for shareholders.
The acquisition is expected to close in April, subject to customary closing conditions, and will have an effective date of January 1, 2023. Houlihan Lokey is serving as financial advisor to Vital Energy in this transaction.
This latest acquisition showcases Vital Energy's commitment to maintaining capital discipline and maximizing free cash flow generation while expanding its footprint into Upton and adding high-return inventory in a new development area in the basin.
Vital Energy is an independent energy company based in Tulsa, Oklahoma, United States. The company is primarily focused on the exploration, development, and production of oil and natural gas in the Permian Basin, which is located in West Texas and southeastern New Mexico.
Vital Energy operates more than 163,000 net acres in the Permian Basin, with a significant portion of its production coming from the prolific Wolfcamp formation.
The company's operations are primarily focused on horizontal drilling and hydraulic fracturing techniques to extract oil and gas from shale rock. It has a total production of approximately 79,600 barrels of oil equivalent per day.
The company has also committed to reducing its greenhouse gas emissions and has set a target to achieve net-zero emissions from its operations by 2050.
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