After spending around $20 billion to significantly expand its footprint in the Permian Basin with the acquisition of Concho Resources and Permian assets from Shell, ConocoPhillips is making some adjustments to its portfolio.
In a recent earnings call, ConocoPhillips CEO Ryan Lance told analysts that last year the company generated $300 million in proceeds from the sale of non-core assets and recently agreed to sell additional properties. Combined, he said, these transactions have reduced both the average cost of supply and the greenhouse gas intensity of ConocoPhillips’ more than 20 billion barrel resource base and put it on on track to reach $4-5 billion in divestments by 2023.
In late January, the company agreed to sell certain Central Basin and Northwest Plateau platform assets covering 144,500 net acres in West Texas and Southeast Mexico for $455 million. The acreage covers Andrews and Ector counties in Texas and Eddy and Lea counties in New Mexico, is largely operated and production owned, producing more than 11,000 barrels of oil equivalent per day.
The buyer was Houston’s Maverick Natural Resources, which already has assets in both the Central Basin Platform and the Northwest Shelf. Company officials told the Reporter-Telegram via email that “the Permian Basin is world-class, with multiple oil-rich productive targets, strong margins with access to oil services and a favorable regulatory environment.”
Maverick acquires properties for their production value, officials said, but the company is also developing inventory opportunistically. From this acquisition, they plan to maximize operating margins, increase production from existing wells and exploit selected drill targets. They plan to make additional Proven, Developed, and Producing (PDP) acquisitions while increasing their workforce in the Permian Basin.
The acquisition was approved by EIG, majority shareholder of Maverick, and financed by a fully committed loan based on reserves from JPMorgan Chase Bank, NA; Royal Bank of Canada; Citizens Bank, North America; National KeyBank Association; and KeyBanc Capital Markets Inc.
“While other companies have struggled with funding, Maverick’s large asset base, low leverage, proven operating model and track record of success have given it access to the capital markets when others couldn’t. This includes the first committed financing based on energy reserves in two years, led by JP Morgan,” Maverick officials said.
The move also signals a positive outlook for the industry, officials told The Reporter-Telegram.
“Certainly, especially for companies like Maverick that are well capitalized, ESG (Environmental, Governance and Social) and have access to capital,” they said.