PDC Energy Inc. (NASDAQ: PDCE) beefed up its core position in the Delaware Basin with a bolt-on acquisition to increase its reserves in the basin by 10%, the company said Jan. 4.

In a $118 million cash deal, the Denver-based company acquired 100% working interest and operations in about 4,500 net acres in Reeves and Culberson counties, Texas, from Fortuna Resources Holdings LLC. The company paid about $24,000 per acre, analysts said—on par with recent Permian Basin transactions costs.

The deal closed Dec. 30 and brings PDC’s holdings in Reeves and Culberson to 61,500 net acres.

Current net production associated with the bolt-on acreage is about 300 barrels of oil equivalent per day. The deal also includes a drilled but uncompleted horizontal well and a saltwater disposal well.

The company estimates the acquired acreage contains 75 gross one-mile horizontal drilling locations, assuming four wells per section in each of the Wolfcamp A, B and C zones. The estimate is based on assumptions used by PDC in a prior Delaware acquisition.

Still a relative newcomer to the Delaware, PDC Energy entered the basin with the acquisition of two privately held companies in December.

For about $1.5 billion in cash and stock, PDC acquired Arris Petroleum Corp. and 299 Resources LLC, managed by Kimmeridge Energy Management Co. The deal, which added a second core operating area to PDC's portfolio, consisted of about 57,000 net acres in Reeves and Culberson.

PDC Energy, Delaware Basin, West Texas, Reeves County, Culberson County, bolt on acquisition, map

The bolt-on acquisition is an example of the company’s strategy to both expand and block up its core Delaware position, said Bart Brookman, president and CEO of PDC Energy.

“Our net acreage, drilling inventory and estimated reserve potential in the basin are expected to increase by approximately 10% with this transaction,” Brookman said in a statement.

The bolt-on acreage is concentrated in PDC’s central acreage block and is contiguous with its acreage position.

“Additionally, by creating a large, contiguous acreage block, we have the opportunity to focus on longer lateral development while optimizing our operational efficiencies,” Brookman added.

PDC plans to integrate the newly acquired acreage into its development drilling plans for its central acreage block.

PDC also operates a large position in the core Wattenberg Field in the Denver-Julesburg Basin in Colorado. Additionally, the company’s portfolio includes assets in the Utica Shale in Ohio.

Fortuna is a Permian-focused producer sponsored by certain affiliates of Och-Ziff Capital Management Group LLC (NYSE: OZM).

Emily Patsy can be reached at epatsy@hartenergy.com.

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