Cimarex Energy Co. closed its sale of oil and gas production assets in the southern Delaware Basin of West Texas to Callon Petroleum Co.'s subsidiary Callon Petroleum Operating Co. for $544.5 million.
The deal consideration includes a $28.5 million deposit made in May and $5.9 million of post-effective date net revenue and expenditures, according to a Sept. 4 news release. Cimarex received the remaining $510.1 million in cash on the closing date of Aug. 31.
The assets are primarily located in Ward County, Texas, and are composed of about 28,000 net surface acres near Callon's Spur operating area in the county, boosting the company's footprint in the basin.
Cimarex plans to funnel the proceeds into its capital program over the next two to three years. As a result of the deal and based on year-to-date results in the Spur area, Callon increased its annual 2018 production guidance midpoint by 1,500 barrels of oil equivalent per day. Callon also raised the midpoint of net operated horizontal wells placed on production by 9% to include activity on the acquired acreage, as well as drilling and completion efficiencies and a rise in non-operated activities in both legacy and acquired properties.
Scotiabank acted as Cimarex's financial adviser.