1979 Royalties, LP (“1979 Royalties”) a subsidiary of Endeavor Energy Resources (“Endeavor”), announced it has closed the acquisition of oil & gas mineral and royalty interests from Peacemaker Royalties, LP (“Peacemaker”), a portfolio company of EnCap Investments, LP (“EnCap”), in the Midland Basin, West Texas for $61 million in cash. The divested properties cover approximately 5,000 Net Royalty Acres (normalized to 1/8th royalty) (“NRA”) in Martin and Dawson Counties and are primarily operated by Endeavor and Ovintiv Inc., which recently completed its $4.275 billion acquisition of multiple Midland Basin operators including Peacemaker’s affiliated operating company PetroLegacy Energy II.
ACQUISITION HIGHLIGHTS
Approximately 5,000 NRA in the northern Midland Basin across Martin and Dawson Counties, Texas
The assets contain 218 producing wells with a net present value discounted at 10% per annum (“PV10”) of approximately $35 million
An additional ~50 near-term drilled uncompleted wells (“DUCs”) and permits add 0.8 net wells expected online by December 31, 2023, at an average 1.6% royalty interest per well
The properties are only ~15% developed horizontally and contain approximately 500 additional undeveloped locations across seven primary horizontal targets
Total PV10 is in excess of $150 million, with an undiscounted value of approximately $425 million generated by net reserves totaling over 9 million barrels of oil equivalent (6:1)
Effective date of June 1, 2023
“This acquisition of mineral and royalty assets on and surrounding our northern Midland Basin operating position is an exciting opportunity to enhance our net revenue interest and margins, while also gaining exposure to a rapidly developing extension of multiple prolific, highly profitable horizontal targets. We applaud Peacemaker and EnCap for assembling this high-quality footprint and look forward to watching accelerating development activity continue to transform the asset in a positive direction,” stated John Phillips, Commercial Land Manager of 1979 Royalties.
Advisors
Vinson & Elkins served as legal advisor to 1979 Royalties.
Detring Energy Advisors served as exclusive marketing advisor to Peacemaker, and Davis, Gerald & Cremer served as its legal advisor.
