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Image courtesy of Pioneer Natural Resources Company.

Pioneer Natural Resources Company said Wednesday that it has has agreed to acquire 28,000 net acres in the Midland Basin from Devon Energy for $435 million.

The acreage is located in Martin, Midland, Upton, Reagan, Glasscock, Andrews, Dawson, Gaines and Howard counties.

Current net production is 1,000 barrels of oil equivalent per day, with oil accounting for about 70 percent of production.

Texas-based Pioneer said that “substantially all” of the acreage is held by production.

Most of the 28,000 net acres are located in the core of the Midland Basin.

About 15,000 of the acquired net acres are located in the Sale Ranch area in Martin County and northern Midland County where Pioneer said it has drilled its most productive Wolfcamp B wells.

The majority of the Wolfcamp B acreage Pioneer is acquiring in the Sale Ranch area is located directly below Pioneer’s Wolfcamp A acreage.

The acquisition, combined with Pioneer’s existing footprint in the area, will add about 70 Wolfcamp B locations to the company’s Sale Ranch area drilling inventory.

The company said it expects before-tax internal rates of return on the wells to be in excess of 50 percent with a before-tax net present value per well of about $10 million.

Pioneer will have an average working interest of 95 percent in the wells.

The remaining 8,000 net acres in the Sale Ranch area and northern Midland County include about 80 Wolfcamp B locations where wells with lateral lengths of less than 7,500 feet can be drilled.

Pioneer will have an average working interest of 68 percent in those locations.

Pioneer plans to acquire or trade for additional acreage adjacent to the leases to boost its working interests and extend well lateral lengths to greater than 7,500 feet.

Pioneer said it plans to use the remaining 13,000 net acres being acquired, along with existing acreage, in trades to further consolidate larger contiguous acreage positions in the core of the Midland Basin.

The acquisition is subject to customary closing conditions and is expected to close during the third quarter of 2016.

The company said that, in conjunction with the acquisition and its improving outlook for oil prices, it expects to boost its horizontal rig count by five rigs from 12 rigs to 17 rigs in the northern Spraberry/Wolfcamp.

The first rig will be added in September 2016 with two additional rigs added in October and November 2016.

Pioneer added that it expects to increase its 2016 capital budget by about $100 million from $2 billion to $2.1 billion as a result of the rig adds.