Published On: Thu, Sep 5th, 2019

Concho Resources to sell New Mexico Shelf assets for $925m, eyes $1.5b stock buyback

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Concho Resources, a US shale producer focused on the Permian Basin of West Texas and New Mexico, has agreed to divest its assets in the New Mexico Shelf to an affiliate of Spur Energy Partners for $925 million, as per the latest oil and gas industry news.

The sale includes around 100,000 gross acres and the company’s New Mexico Shelf assets that currently produce approximately 25,000 barrels of oil equivalent per day.

Concho Resources, however, will maintain its large presence in the Delaware Basin in New Mexico.

The US shale producer will also launch a repurchase program of approximately $1.5 billion of its shares of common stock following authorization from board of directors.

Concho Resources to sell New Mexico Shelf assets to Spur Energy Partners

Concho Resources to sell New Mexico Shelf assets to Spur Energy Partners. Image courtesy of Vlado at FreeDigitalPhotos.net.

Tim Leach – chairman and CEO of Concho Resources said: “Proactively managing our asset portfolio has long been a key part of our strategy. Divesting our New Mexico Shelf position enables us to accelerate the value of these legacy assets, while focusing our portfolio on opportunities with the highest potential for strong returns.

“Further, the transaction reduces our cost structure and allows us to achieve the leverage target we communicated earlier this year, while delivering additional returns to shareholders under an initial $1.5 billion share repurchase program.

“The share repurchase program demonstrates our continued confidence in our strategy to generate sustainable oil growth and strong cash flow, and reflects our commitment to delivering long-term value to our shareholders.”

The proceeds from the deal will be used to pay down borrowings and initiate the share repurchase program.

Subject to customary terms and conditions, the transaction is expected to close in November 2019.

RBC Richardson Barr served as financial advisor to Concho Resources on the sale of the New Mexico Shelf assets.

Spur Energy Partners was formed recently with the backing of KKR. The company’s objective is to make acquisitions and develop oil and gas properties that have base production and significant low-cost development inventory across the Lower 48.

For more oil and gas industry news, keep following Business News Today.

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