Concho Resources Inc. agreed to buy assets of closely held Marbob Energy Corp. for $1.65 billion, the largest acquisition in its history, expanding its oil and natural-gas holdings in the Permian Basin of New Mexico.
The purchase, to be made with cash and stock, includes assets with proved reserves estimated at the equivalent of 76 million barrels of oil, Midland, Texas-based Concho said today in a statement. Marbob’s assets produced the equivalent of 14,000 barrels of oil a day in the first quarter and include about 2,300 drilling locations for development, Concho said.
The purchase comes eight months after Concho announced it would spend $225 million to buy wells and acreage in the Permian Basin, where the company is accelerating drilling. With the Marbob deal and existing holdings, Concho said it will have 100,000 net acres in the Bone Springs area of the basin.
“The company has a history of acquisitions and they’ve done a good job creating value from these,” said Scott Hanold, an energy analyst at RBC Capital Markets in Minneapolis who rates Concho “sector perform.” “This will give them a lot more running room and should be viewed positively by the market.”
Concho rose $4, or 7.5 percent, to $57.29 as of the 4 p.m. close of New York Stock Exchange composite trading. The company has jumped almost fivefold in market value since selling shares to the public in 2007.
Bank of America Merrill Lynch advised Concho, and Vinson & Elkins LLP represented the company in the purchase and related financing. Concho’s board has approved the purchase, which the company said is expected to close by Nov. 30.