HOUSTON—A&D gamesmanship in the Permian may be intense as deal makers duke it out for a stake in the prolific basin, but Rosehill Resources Inc. (NASDAQ: ROSE) likes its chances to quadruple its footprint to roughly 20,000 net acres.

Rosehill, a pure-play Delaware Basin E&P with deep roots in West Texas, emerged earlier this year with capital to make deals thanks to a “prepackaged IPO” with a public blank-check company.

Rosehill Resources: Asset Map

“We’re definitely in the acquisition market,” J.A. (Alan) Townsend, president and CEO of Rosehill Resources, told attendees at the Summer NAPE business conference.

“We’ve looked at a number of acquisitions in the past three months,” Townsend said. “We’ve gone down the path on a couple of them, but we have yet to find one that we want to do. We expect to be aggressive.”

Rosehill wants to expand its footprint in the Delaware, targeting acquisitions ranging from 3,000 to 10,000 net acres. Despite heavy A&D competition in the basin, Townsend said he’s aiming for more than 20,000 acres by the next couple of years.

“The size of our current acreage position of about 5,000 acres we think puts us in a position to be a bit of an aggregator,” he said.

Rosehill was formed in April following the combination of Tema Oil and Gas Co. with KLR Energy Acquisition Corp., a special-purpose acquisition company (SPAC) led by industry veteran Garry Hanna.

As of March, the company held 4,771 net acres in Loving County, Texas, with an estimated inventory of 252 horizontal locations targeting 10 benches.

However, Rosehill is no newcomer to the Permian, Townsend said.

Tema, a wholly owned subsidiary of Rosemore Inc. traces its origins to American Oil Co. (Amoco), which has operated in West Texas for more than 50 years, he said.

“As a matter of fact, the initial property in Loving County, which amounts [to] our core acreage, was taken as lease by Talco (Tema’s predecessor company) in 1952,” he said.

Like many operators, Tema struggled during the recent downturn.

By early 2016, Townsend said the company set out “on the search for capital” with an eye on neighboring operators such as EOG Resources Inc. (NYSE: EOG) and Anadarko Petroleum Inc. (NYSE: APC), which looked to aggressively drill. Tema’s acreage stood to lose value if it could not develop and operate its position.

Along came KLR Energy Acquisition Corp., led by Hanna, the former CEO of EPL Oil & Gas Inc. Following the completion of its $80 million IPO in March 2016, the SPAC was hunting for deals. It considered roughly 50 to 60 companies before discovering Tema.

Rosehill Resources: Average Daily Production

Townsend sees the company’s business combination with KLR as an interesting avenue for companies to raise capital.

Townsend, who has served as Tema’s CEO since 2008, said he found himself at the head of a public company “all of a sudden.” KLR’s capital enabled Rosehill to invest in the science and technology it’s now deploying, he said.

Rosehill’s acreage position is in the deepest part of the Delaware Basin and includes historical production from the Brushy Canyon area, Townsend said. The company estimates its assets include 3,435 ft of pay zone, including more than 1,600 ft in the Wolfcamp A and B.

“It has the most pay, stacked up,” he said. “We have 10 identified benches to develop—our geology staff says it could be 12.”

This year, Rosehill plans to drill between 22 and 24 wells with a capex of up to $155 million.

Management expects to exit the year with production at roughly 10,000 barrels of oil equivalent (boe/d), nearly “doubling our average for the year and setting us up for a pretty impressive 2018,” Townsend said. Rosehill’s average production in March was about 5,700 boe/d.

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