Baytex Energy Group has announced that it will acquire Eagle Ford exploration and production company, Ranger Oil, for approximately $2.5 billion in cash and stock, which includes taking over the company's existing debt.
Upon the successful closure of the acquisition, Baytex will have a controlling stake of approximately 63% in the newly merged company, leaving Ranger shareholders with around 37%. This significant move is in line with a trend of substantial mergers and acquisitions in the Eagle Ford area, with Marathon Oil, Devon Energy, and Chesapeake Energy among the companies involved in recent transactions.
Baytex is all set to acquire Ranger Oil, with the deal scheduled to close in the second quarter of 2023. The CEO of Baytex, Eric T. Greager, is excited about the move and expects it to work wonders for the company's financials.
The acquisition opens up a world of opportunities for Baytex, with Ranger Oil's inventory now competing for capital within their portfolio. This creates the potential for up to 15 years of oil-weighted drilling locations, a massive boost for Baytex's growth prospects. Moreover, the acquisition adds Eagle Ford scale to Baytex's existing non-operated position in the Karnes Trough.
The key details of the Baytex-Ranger Oil deal are:
- The acquisition covers 162,000 net acres in the crude oil window of the Eagle Ford shale, with a significant presence in Gonzales, Lavaca, Fayette, and Dewitt counties in Texas.
- The deal will add between 67,000 boe/d to 70,000 boe/d to Baytex's production, with 72% light oil, 15% NGLs, and 13% natural gas.
- The acquisition also results in a boost in the company's proved reserves by 174 MMboe.
- Baytex CEO, Eric T. Greager, believes the acquisition will provide a more durable business with a lower breakeven WTI price and bring meaningful per-share accretion on all metrics.
Quick Facts: Baytex Energy Group's Operations in Eagle Ford Shale
- Baytex Energy Group has a significant presence in Eagle Ford, which includes 19,900 acres of net contiguous land holdings.
- In the FY/2022, the company recorded a production of 28,200 barrels of oil equivalent per day.
- Baytex's assets comprise non-operated working interests in four areas of mutual interest (Sugarloaf, Longhorn, Ipanema, and Excelsior), with an average working interest of roughly 25%. The company deploys hydraulic fracturing techniques to extract oil from horizontal wells.
- In 2023, Baytex plans to bring approximately 15 net wells into production.
According to Baytex, there are currently 741 net undrilled locations available for oil exploration and production, which would provide an inventory life of 12 to 15 years. These locations are in direct competition for capital within Baytex's portfolio. Out of the 741 locations, 523 are high-quality opportunities located in the Lower Eagle Ford, with the remaining 218 opportunities located in the Upper Eagle Ford and Austin Chalk formations.
