Matador Resources in $1.91 bln Deal to Expand in Delaware Basin

U.S. oil and gas producer Matador Resources said on Wednesday it would add oil and natural gas producing assets and undeveloped acreage in the Delaware basin in an about $1.91 billion cash deal for a unit of Ameredev II Parent.

Deal-making in the U.S. shale patch hit record levels in 2023 and has extended into this year, as exploration and production companies chase premium drilling locations and scale.

Exxon Mobil’s $60 billion takeover of Pioneer, Chevron’s $53 billion pending acquisition of Hess and ConocoPhillips’ $22.5 billion deal for Marathon Oil announced late last month are among the big acquisitions during the period.

Ameredev is part of EnCap Investments and the deal marks a second significant transaction Matador has done with the private-equity firm in the last 18 months.

Matador said the deal, expected to close in the third quarter, includes a 19% stake in Pinon Midstream that owns assets in southern Lea County in New Mexico.

Following the deal close, Dallas, Texas-based Matador expects to have over 190,000 net acres in the Delaware Basin, and production of more than 180,000 barrels of oil equivalent per day (boepd) on a pro forma basis.

It is a great deal for Matador at first glance at an attractive valuation, said Gabriele Sorbara, managing director of equity research at Siebert Williams Shank & Co.

“Scale is important in the E&P sector, and this deal expands both its E&P and midstream assets while keeping leverage in check,” he adds.

However, RBC Capital Markets analyst Scott Hanold said there could be some investor caution with leverage increasing given the all-cash payment.

(Reuters reporting by Vallari Srivastava in Bengaluru; Editing by Sonia Cheema and Sriraj Kalluvila)