Denver-based independent SM Energy Company has purchased over 24,000 acres in West Texas from Rock Oil Holdings for $980 million.
SM Energy said it has entered into a definitive agreement to purchase 24,783 net acres in Howard County, West Texas.
The purchase will expand SM Energy’s Midland Basin footprint to about 46,750 net acres.
The acquired acreage position is largely contiguous and includes about 4,900 barrels of oil equivalent per day net production.
An additional two new wells are expected to come online at the site sometime this month.
The acres also include 6 million barrels of oil equivalent of proved developed producing reserves, SM Energy said.
Denver- and Houston-based Rock Oil is an oil and gas company focused on the Permian Basin.
“We expect that the implementation of pad drilling, reservoir modeling, zipper frac’s, and leading edge completion technologies will add value from the start. We anticipate running one rig in the area in the fourth quarter of 2016 and two rigs throughout 2017,” SM Energy president and CEO Jay Ottoson said.
Ottoson added that, as a result of the purchase, SM Energy is increasing its total capital spend estimate for 2016 by about $15 million to $20 million.
The transaction will be effective as of September 1, 2016 and closing is expected to occur in early October, subject to customary closing conditions.