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Oasis Petroleum to acquire Delaware Basin acreage for $946M

Oasis Petroleum Inc. agreed with Forge Energy LLC to acquire Delaware Basin acreage for about $946 million, according to a Dec. 11 news release.

The acquisition includes about 20,300 net acres in Texas' Loving, Ward, Winkler and Reeves counties that produced about 3,500 barrels of oil equivalent per day in November. The assets include 601 gross operated locations with 76% working interest and 507 net core locations targeting the Wolfcamp A, B and C and Bone Spring formations. The contiguous acreage blocks allow for longer laterals, with an expected median length of about 8,000 feet.

Oasis expects to drill 16 to 20 gross wells and complete six to eight gross wells, with a capital program of about $100 million in 2018. The company also plans on running one rig, with potential to add a second rig in the second half of 2018.

Funding for the acquisition comprises $483 million in cash and 46 million shares of Oasis Petroleum's common stock, valued at about $463 million as of the close of trading Dec. 8.

The acquisition, effective Dec. 1, is expected to close in February 2018, with Forge Energy receiving full consideration less a deposit at that time.

Oasis Petroleum, in a separate release, launched an underwritten public offering of 32,000,000 shares of its common stock. The company gave the underwriters a 30-day overallotment option for up to 4,800,000 additional shares. Part of the proceeds from the offering would fund a portion of the acquisition. If the acquisition does not occur, the net proceeds would be used for general corporate purposes, which may include additional 2018 capital expenditures.

Goldman Sachs & Co. LLC and Credit Suisse Securities (USA) LLC are acting as joint book-running managers for the offering.