Tulsa-based Vital Energy Inc. is significantly expanding its presence in the Permian Basin, a key oil-rich region in West Texas, through a $55 million deal. The company has acquired additional working interests from Permian Basin operator Henry Energy LP, Moriah Henry Partners LLC, and Henry Resources LLC.
This move aligns with Vital Energy’s strategic objective to enhance its operations in acquiring, exploring, and developing oil and natural gas properties in the Permian Basin. The acquisition notably increases Vital Energy’s stake in 45 existing wells by an
average of 24%. It’s expected to substantially boost the company’s production in 2024 by nearly 1,400 barrels of oil equivalent per day (BOE/D), with 57% of this being oil. Furthermore, this deal is set to enhance Vital Energy’s 2024 Free Cash Flow by close to $20 million, aiding in the company’s efforts to reduce debt.
The funding for this transaction was facilitated through the exercise of tag-along rights related to the Henry acquisition. This provision allowed Vital Energy to acquire and finance these assets under the same terms as the initial purchase and sale agreement, where the company’s shares were valued at $54.96 each. To finance the acquisition, Vital Energy issued 627,000 shares of common stock and 595,000 shares of 2.0% cumulative mandatorily convertible preferred securities.
Jason Pigott, President and CEO of Vital Energy, expressed enthusiasm about the acquisition. “This transaction showcases the opportunities our expanded presence in the Permian Basin offers,” he said. “Our increased footprint across the Midland and Delaware basins is driving efficiencies through bolt-on transactions.
These not only boost our working interest but also optimize our development plans by allowing for longer laterals. We anticipate these high-value acquisitions to yield continued improvements in capital efficiency and an increase in Free Cash Flow.”
This strategic expansion in the Permian Basin underscores Vital Energy’s commitment to growing its portfolio and enhancing operational efficiency in one of the most prolific oil and gas regions in the United States.
