[Editor's note: This story was updated at 10:18 a.m. CST Nov. 1.]

Rosehill Resources Inc. (NASDAQ: ROSE) is more than doubling its position in the southern Delaware Basin with a deal to acquire up to 9,100 largely contiguous net acres, the Houston-based company said Oct. 30.

As part of an agreement with an undisclosed seller, Rosehill will initially pay $77.6 million to purchase 4,565 net acres in northwestern Pecos County, Texas. The deal includes an option for Rosehill to buy an additional 4,535 net acres at the same acreage price—an estimated $16,600 per acre, according to Hart Energy analysis.

The acquisition, which also includes producing properties with limited production of 40 barrels of oil equivalent per day (boe/d), will establish a second core operating area in the Delaware Basin to Rosehill’s current position in Loving and Reeves counties, Texas, and Lea County, N.M.

Overview: Rosehill’s Pecos Acquisition

Rosehill emerged earlier this year on the hunt for Delaware deals supplied with capital thanks to a “prepackaged IPO” following a merger with a public blank-check company.

In August, J.A. (Alan) Townsend, Rosehill’s president and CEO, told attendees at the Summer NAPE business conference in Houston that the company expected to be “aggressive” in its pursuit of additions to its position in the Delaware Basin.

Despite heavy A&D competition in the basin, Townsend said the company is 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.

RELATED: Executive Q&A: Rosehill’s Time To Bloom

As of September, the company held 4,645 net acres primarily in Loving with an estimated inventory of roughly 250 horizontal locations. Production averaged about 5,258 boe/d in second-quarter 2017.

Rosehill Resources: Asset Map

Rosehill’s Pecos acquisition comprises high average working interest of 86% with all acreage HBP or by lease term through at least 2020. Additionally, the contiguous acreage position enables 7,500-ft to 10,000-ft laterals, which the company expects can “significantly improve well economics.”

Not only will the acquisition grow Rosehill's acreage size, the deal also provides “meaningful growth” to its portfolio by more than doubling its drilling locations, Townsend said in a statement on Oct. 30.

“We are excited to acquire an attractive acreage position in Pecos County at less than $500,000 per drilling location,” he said. “We are confident in our operational capabilities, which will help us to maximize value and generate sustainable growth.”

In total, the acquisition will add more than 325 gross potential horizontal drilling locations with opportunities in multiple benches including the Wolfcamp A, Wolfcamp B and Bone Spring. Additional upside potential from deeper Wolfcamp horizons also exists, according to the Rosehill press release.

Townsend said Rosehill is also encouraged by results from offset operators, which include Diamondback Energy Inc. (NASDAQ: FANG), Jagged Peak Energy Inc. (NYSE: JAG) and Parsley Energy Inc. (NYSE: PE).

“Our geological assessment indicates an anomalously thick Wolfcamp A/B interval with reservoir properties analogous to the Reeves County core,” he said. “There is potential across multiple stacked zones. We believe there is tremendous value in our Delaware Basin assets.”

Rosehill is currently evaluating several potential sources of financing for its Pecos acquisition including preferred equity, debt or a combination of both, according to the release. The company said it expects to close the transaction in fourth-quarter 2017 

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