Colgate Energy Announces Strategic Acquisition of Assets in New Mexico


MIDLAND, Texas – (COMMERCIAL THREAD) – Colgate Energy Partners III, LLC (the “Company” or “Colgate”) announced today that it has entered into a definitive agreement with an undisclosed vendor to purchase approximately 22,000 net acres, this which directly offsets Colgate’s current position in Eddy and Lea Counties for $ 190 million, subject to customary closing adjustments. Colgate plans to fund the acquisition through a combination of cash, gun borrowing and / or other potential debt financing. The effective date of the transaction is September 1, 2021 and the closing is expected to occur in the first quarter of 2022.

Highlights of transactions

  • ~ 22,000 net acres in Eddy and Lea counties, the majority of which is directly offset by the former Colgate Parkway operating area

    • Acquired area has an average 8 / 8th net income interest of over 80%

    • The area is more than 95% exploited with an average active participation of around 78%

    • Current estimated average net daily production of ~ 750 Boepd

  • Colgate’s 11 drilled and completed wells have achieved extremely robust performance metrics:

    • Average IP 30 / day of about 3,600 boe / d(1)

    • Average CUM oil production over 6 months of 250,000 barrels / 10,000 ‘

    • Average cash-on-cash payment at the well over approximately 4 months

  • Adds over 200 high-quality locations that complement Colgate’s existing inventory

  • Complements Colgate’s existing portfolio by adding high NRI and high IRR inventory for short-term development

Pro forma business highlights

  • ~ 108,000 net acres located primarily in Reeves, Ward and Eddy counties

  • Current net daily production estimated at around 62,000 boepd

  • Currently running 5 platforms

James Walter, Co-CEO of Colgate, commented: “Building on the transformative transactions completed earlier this year in Texas, this acquisition in New Mexico strengthens Colgate’s position as a leading private operator in the Permian basin. When making acquisitions, we focus on adding highly economical inventory that will generate improved returns and free cash flow while maintaining low leverage. Colgate’s strong balance sheet and abundant liquidity allow us to execute a cash transaction of this size while continuing to target 2022 leverage below 1.0x. ”

Will Hickey, Co-CEO of Colgate, added: “The acquisition of this high quality asset base adds to our existing inventory in the northern Delaware Basin where we recently drilled some of the best wells in the world. history of the company. Considering the depth of our current inventory, we have a very high bar for acquisitions and this was just too good to pass up. We are delighted to allocate drilling activity to these properties next year. ”

About Colgate

Colgate is a privately held, independent oil and natural gas company headquartered in Midland, Texas that is engaged in the acquisition, exploration and development of oil and gas assets in the Delaware Basin, with operations mainly concentrated in Reeves County, Ward County and Eddy County. For more information on Colgate, please visit our Investor Relations website at

Forward-looking statements

This press release contains forward-looking statements based on Colgate’s current expectations that involve a number of risks and uncertainties. Generally, forward-looking statements do not relate strictly to historical or current facts and may include words such as “believes”, “will”, “expects”, “anticipate”, “intend” or similar words or phrases. No forward-looking statement can be guaranteed. Many risks, uncertainties and other factors can cause actual results to differ materially from those expressed in any forward-looking statement. In particular, this press release includes certain indications regarding future production and leverage on a pro forma basis giving effect to this transaction. These forward-looking statements represent our management’s estimates as of the date of this press release, based on numerous assumptions that are subject to adjustment upon further examination, and we do not undertake to update these estimates as of the date of this press release. ‘to come up. The achievement of these estimates will depend on the impacts of COVID-19, availability of capital, regulatory approvals, raw material prices, drilling and completion costs, actual drilling results, business, economic, competitive risks. , financial and regulatory and other factors, many of which are beyond our control. If any of these risks and uncertainties actually occur or if the assumptions underlying our forecasts are incorrect, our actual operating results may differ materially and adversely from our forecasts.

(1) Average IP rate 30 / day normalized at 10,000 lateral feet.

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