The assets to be acquired are located primarily in Martin County Texas within the Midland Basin capturing some of the thickest stacked pay reservoir quality in North America, with a significant weighting to undeveloped lands, to maximise development and recoveries
Freehold to buy royalty assets in the Midland and Delaware Basins. (Credit: Joe from Pixabay)
Canada-based Freehold Royalties has agreed to acquire Permian mineral title and royalty assets in the Midland and Delaware Basins from two private sellers for a total of around C$112m ($82.5m)
The assets to be acquired are located primarily in Martin County Texas within the Midland Basin capturing some of the thickest stacked pay reservoir quality in North America.
In addition, the assets hold a significant weighting to undeveloped lands, which is anticipated to maximise development and recoveries.
The future development of the assets will be led by a strong portfolio of operators with core inventory ranking as some of the best within their portfolio, said Freehold Royalties.
Freehold intends to fund the acquisition, which is expected to be completed in January 2024, using its existing credit facility.
Freehold Royalties, in its statement, said: “The acquisitions are consistent with Freehold’s strategy of positioning its portfolio ahead of the drill bit in high-quality resource plays and complements the company’s existing North American asset base.
“We expect the addition of the acquired assets will contribute enhanced returns and sustainability to shareholders for multiple years into the future.”
The Canadian company will acquire assets spanning around 123,000 gross acres in the core of the Permian Basin, 76% in Midland and 24% in the Delaware Basins.
Upon closing, Freehold’s total land position will increase by 40% to more than 0.5 million gross acres and will represent around 57% of Freehold’s gross land base in the US.
More than 40% of the total 2,670 net royalty acres of the acquired assets are undeveloped and provide significant future activity potential.
The 2024 forecast estimates an average production of 600boe/d, generating around $15m from operations, increasing Freehold’s Permian production by 30% and US production by 12%.
Upon closing, Freehold’s total US inventory is expected to increase by 25%, bringing the company’s total US inventory to more than 10,000 gross locations.
