$440 million buy expands Maverick’s footprint
Mella McEwen, MRT.com/Midland Reporter-Telegram
Ryan Lance, ConocoPhillips CEO, is shown in this 2018 file photo. He said selling noncore assets like holdings in the Central Basin Platform and Northwest Shelf to companies like Maverick Natural Resources puts the company on the road to $4 to $5 billion in divestitures.
Melissa Phillip/Houston ChronicleAfter spending approximately $20 billion to greatly expand its Permian Basin footprint with the acquisition of Concho Resources and Shell’s Permian assets, ConocoPhillips is making some adjustments to its portfolio.
In a recent earnings call, ConocoPhillips Chief Executive Officer Ryan Lance told analysts that last year the company generated $300 million in proceeds from the sale of noncore assets and recently agreed to sell additional properties. Combined, he said, those transactions reduced both the average supply cost and greenhouse gas intensity of ConocoPhillips’ more than 20-billion-barrel resource base and puts it on track to achieve $4 billion to $5 billion in divestitures by 2023.
At the end of January, the company agreed to sell certain assets in the Central Basin Platform and Northwest Shelf covering 144,500 net acres in West Texas and Southeastern 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 held by production, producing more than 11,000 barrels of oil equivalent per day.
The buyer was Maverick Natural Resources of Houston, which already has assets in both the Central Basin Platform and Northwest Shelf. Company officials told the Reporter-Telegram by email that “The Permian Basin is world-class, with multiple productive oil-rich targets, strong margins with access to oilfield services and a supportive regulatory environment.”
Maverick acquires properties for their producing value, the officials said, but the company also opportunistically develops inventory. Of this acquisition, they plan to maximize operating margins, increase production from existing wells and exploit selected drilling targets. They plan to make additional proved, developed, producing (PDP)-focues acquisitions while also growing its Permian Basin workforce.
The acquisition was approved by Maverick’s majority equity owner EIG and funded by a fully committed reserve-based loan from JPMorgan Chase Bank, N.A.; Royal Bank of Canada; Citizens Bank, N.A.; KeyBank National Association; and KeyBanc Capital Markets Inc.
“While other companies have been challenged in terms of financing, Maverick’s large asset base, low leverage, proven operating model and track record of success have allowed it to access capital markets when others could not. This includes the first committed energy reserve-based financing 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, in particular for companies such as Maverick that are well capitalized, ESG (Environment, Governance and Social)-forward and have access to capital,” they said.
