Sanchez said late Wednesday the assets include 60 million barrels of oil equivalent of proved reserves and 24,000 barrels of oil equivalent per day of production in the first quarter, 60% of which is liquids.
It is acquiring a 100% working interest and a 75% net revenue interest in 106,000 acres in Dimmit, LaSalle and Webb counties. That is expected to bring Sanchez's holdings in the area to 226,000 acres with up to 3,000 potential drilling locations and average first-quarter production of 42,800 barrels of oil equivalent per day.
The acquisition, which will be backdated to Jan. 1, also comes with 200 low-risk drilling locations, with 35% to 50% rates of return and 800 potential locations, bringing the company's potential drilling locations to almost 3,000 wells.
Sanchez said it expects the deal to immediately add to earnings and cash flow per share. It said the deal was worth $10.65 per barrel of oil equivalent based on year-end 2013 reserves and $32,000 per barrel of oil equivalent per day based on estimated production in May of 20,000 barrels of oil equivalent per day. The producing assets come with infrastructure. Sanchez said it plans to pay for the deal with $950 million in committed debt financing.
Sanchez Energy CEO Tony Sanchez III said the company's initial estimates put the acquisition's resource potential at up to 500 million barrels of oil equivalent. The deal should close in the second quarter if it clears regulators.