Today, Contango Oil & Gas Co said it plans to acquire natural gas wells in the Wind River Basin of Wyoming from ConocoPhillips. Accordingly, this transaction would be valued at $67 million.
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Similarly, Contango added it would acquire the proven oil and natural gas wells and reserves of about 446 billion cubic feet; this is a significant transaction from the Houston-based independent exploration and production giant, the company acknowledged.
About the natural gas wells purchase
Worth noting, the Fort Worth-based producer plans to fund its acquisition with cash on hand; besides, it intends to use its revolving credit line for funding purposes. Indeed, Contango expects to close this natural gas wells transaction in the third quarter of 2021.
In this sense, Contango CEO Wilkie Colyer said in a statement; “The acquisition of these Wind River Basin assets is yet another step in our consolidation strategy. Besides, it is an excellent fit to our asset profile.”
Moreover, “this is a huge, conventional gas field,” continued Colyer. Besides, it has a “low decline, purchased at an attractive valuation.”
Similar strategies to weather oil downturns
In fact, Contango has purchased several oil and gas assets during the pandemic-driven oil bust. For instance, the company last year acquired Mid-Con Energy Partners in an all-stock deal valued at $154.8 million. Similarly, last month, it announced plans to merge with Independence Energy; particularly, this merge will create an oil and gas company worth about $5.7 billion.
On the other hand, ConocoPhillips has also been consolidating strategies to weather the oil downturn over the past year. For instance, the company sold its Western Australia assets and operations to Santo for $200 million last year. Similarly, in January this year, it completed its $9.7 billion acquisition of Concho Resources.
Lastly, the natural gas wells being sold to Contango by ConocoPhillips produce about 78 million cubic feet of oil and natural gas per day. Besides, these natural gas wells could have a low decline rate of about 5 percent annually over the next five years.