Matador Acquires Advance Energy for $1.6B

Matador Resources acquires Advance Energy for $1.6B, including oil and gas properties in NM and TX. Additional $7.5 million to be paid in 2023 if oil price exceeds $85/barrel according to a DMagazine article which reports, 

“Dallas-based Matador Resources agreed to acquire Advance Energy Partners Holdings for $1.6 billion. The transaction, which is the largest in the company’s 20-year history, also includes oil and natural gas producing properties and undeveloped acreage in Lea County, New Mexico and Ward County, Texas. 

Matador will pay an additional cash consideration to the EnCap Investments portfolio company of $7.5 million for each month in 2023 in which the average oil price exceeds $85 a barrel.”

The CEO, Joseph Foran, expects the acquisition to improve overall returns and costs, and the deal is expected to close in Q2 2023. An additional $7.5 million will be paid for each month in 2023 with average oil prices exceeding $85 a barrel according to a Retuers article. They say,

“”This acquisition also provides us with increased operational scale in the Delaware Basin, which we expect will improve our overall rates of return and unit-of-production cost,” Joseph Foran, Matador’s Chief Executive Officer said in a statement. 

The deal is expected to close early in the second quarter of 2023, Matador said. 

Energy-focused investment firm EnCap Investments LP had merged Advance Energy Partners and Ameredev II LLC in December 2021. Both companies operate in the Delaware portion of the Permian basin – the region in Texas and New Mexico considered the heart of the U.S. shale industry.”

The acquisition is expected to bring a significant boost to Matador Resources with projected forward one-year adjusted EBITDA of $475-$525 million and a purchase price multiple of 3.2x. This move solidifies Matador’s position as a leader in the industry.