Freehold Royalties to acquire Permian Basin Royalty assets for $82m
Christian Fernsby ▼ | December 12, 2023
Freehold Royalties entered into definitive agreements with two private sellers to acquire high quality Permian mineral title and royalty assets located in the Midland basin in Texas and the Delaware basin in New Mexico and Texas for approximately CAD$112 million ($82m), net of estimates for exchange rates and customary closing adjustments.Article continues below
Acquired Asset highlights include:
Approximately 123,000 gross acres concentrated in the core of the Permian basin, comprised of 2,670 net royalty acres (normalized to 1/8th); 76% Midland, 24% Delaware.
Upon closing the Acquisitions, Freehold’s total Permian land position will increase by 40% to greater than 0.5 million gross acres and will represent approximately 57% of Freehold’s US gross land base. Over 40% of the Acquired Assets net royalty acres are undeveloped, providing significant future activity potential.
2024 forecast average production of 600 boe/d, generating funds from operations of approximately $15 million (assuming current commodity prices and exchange rates), increasing Freehold’s Permian production by approximately 30% and the Company’s US production by 12%.
85% liquids weighted based on production, versus Freehold’s Q3-2023 average US liquids weighting of 78% and the Company’s total liquids weighting of 63%, providing meaningful uplift to Freehold’s average realized price and sustainability of returns.
Strong well performance with average 365-day initial gross production rates of approximately 600 boe/d per Permian well (based on average performance of wells drilled in 2020-2022 on the Acquired Assets). ■ What to read next
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