Ring Energy has completed the acquisition of Founders Oil & Gas IV’s Central Basin Platform (CBP) assets located in the Permian Basin in Ector County, Texas.
Ring Energy said in its press release that CBP operations are focused on developing approximately 3,600 net acres that are similar to Ring’s CBP assets acquired in 2022 from Stronghold Energy Operating II.
The company noted that the acquisition is immediately accretive to its production, reserves and adjusted free cash flow. In addition, it will accelerate Ring’s ability to repay debt and increase the company’s inventory of low-risk, high-rate-of-return drilling sites, allowing for flexibility in capital allocation, Ring Energy noted.
The acquisition is priced at $65 million, with Ring putting up a cash deposit of $7.5 million, paid on July 11, 2023, followed by a cash payment of approximately $42.5 million dollars at closing. The transaction also includes a deferred cash payment of $15 million due on or about December 15, 2023.
The total consideration was initially set at $75 million, subject to customary closing adjustments, consisting of $60 million in cash at closing and a $15 million deferred cash payment, Ring said when announcing the ‘acquisition.
The cash payment at closing was funded by borrowings under Ring’s senior revolving credit facility.
“We are pleased to inform our shareholders that we closed our previously announced acquisition of Founders Oil & Gas CBP assets on August 15, 2023. This transaction complements our conventional-focused CBP asset position in the basin of the Permian with assets similar to CBP assets that we acquired in the third quarter of last year,” commented Paul D. McKinney, Chairman of the Board and Chief Executive Officer.
“Our short-term focus is to rapidly integrate these operations into our business, while formalizing detailed development plans for the acquired assets. Similar to our other inventory in the area, these assets have stacked pay zones of high quality rock with proven performance. We intend to leverage our extensive experience applying new conventional and unconventional technologies to optimally develop the acquired inventory of undeveloped drilling locations. In short, we view this acquisition as another example of value creation through our proven value-focused strategy and further positions the company to achieve our long-term goals for our shareholders,” said McKinney.
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