An affiliate of KKR-backed Spur Energy Partners has struck a deal with Texas-based shale producer Concho Resources to purchase Concho’s New Mexico Shelf assets for $925 million.
The parcel comprises 100,000 acres near the Delaware basin, producing 25,000 barrels of oil per day, Concho announced on Sept. 3.
In May, Spur Energy Partners and KKR formed a partnership to acquire large, high-margin oil and gas production and development assets in the Lower 48.
“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,” said Tim Leach, chairman and CEO of Concho.
The company intends to use the proceeds from the transaction to pay down borrowings on its revolving credit facility and initiate the share repurchase program.
“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,” added Leach. “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.”
