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)
