Lilis Energy Inc. (NASDAQ: LLEX) may be the sleeper hit of 2017 Permian Basin A&D action, despite its relatively small position compared to its large-cap peers.
Lilis said Oct. 4 it reached an agreement to acquire more than 4,000 net contiguous acres in the Delaware Basin for about $45.6 million in cash. Lilis, based in San Antonio, didn’t disclose the seller.
The deal price comes in at an ultra-low $11,400 per undeveloped acre. In six deals since June, transactions have averaged $27,000 per acre.
When closed, the transaction will increase Lilis’ holdings by one-third to about 15,250 net acres—surpassing its 2017 acreage goal. Since June 2016, the company has expanded its acreage footprint by more than 300%, Lilis said.
The acquisition not only adds contiguous acreage but also increases the company’s overall working interest and operatorship, Lilis Executive Chairman Ron Ormand said in a news release.
The acreage overlaps 92% of Lilis’ existing position along the eastern flank and creates a position that is “among the most contiguous in the basin,” Mike Kelly, an analyst at Global Seaport Securities, said in a report.
Kelly said the acreage is “highly conducive” to long-lateral development and in a solid zip code with offset operators such as RSP Permian Inc. (NYSE: RSPP).
The company has continued to make small, agile moves in the area beginning with an October 2016 purchase of 640 gross acres from a bankruptcy company for $3 million, or about $5,000 per acre.
That purchase came the same day RSP Permian purchased Silver Hill Energy Partners LLC—adjacent to Lilis —for about $2.4 billion or $47,000 per acre.
The company will fund the acquisition with a drawdown of its remaining $45 million second lien term loan with Varde Partners, Gabriele Sorbara, an analyst for The Williams Capital Group, said in an Oct. 4 report.
“Pro forma for the acquisition and funding, we estimate [Lilis] to have a total liquidity of $42.1 million, consisting of cash on hand,” Sorbara said. “We expect [Lilis] to enhance its liquidity as it grows production and proved reserves.”
Darren Barbee can be reached at dbarbee@hartenergy.com.
Recommended Reading
CERAWeek: NextEra CEO: Growing Power Demand Opportunity for Renewables
2024-03-19 - Natural gas still has a role to play, according to NextEra Energy CEO John Ketchum.
Could Concentrated Solar Power Be an Energy Storage Gamechanger?
2024-03-27 - Vast Energy CEO Craig Wood shares insight on concentrated solar power and its role in energy storage and green fuels.
Energy Transition in Motion (Week of Feb. 2, 2024)
2024-02-02 - Here is a look at some of this week’s renewable energy news, including a utility’s plans to add 3.6 gigawatts of new solar and wind facilities by 2030.
Energy Transition in Motion (Week of April 12, 2024)
2024-04-12 - Here is a look at some of this week’s renewable energy news, including a renewable energy milestone for the U.S.
First Solar Gunning for $1B More in 2024 Sales
2024-02-28 - Solar module manufacturer First Solar forecasts 2024 net sales of between $4.4 billion to $4.6 billion, with annual volumes sold ranging from 15.6 gigawatts (GW) to 16.3 GW.