UPDATE 2-Callon Petroleum buys Permian asset for $475 mln, exits Eagle Ford
(Adds shares, deal details, CEO statement, buyback plan)
May 3 (Reuters) - Callon Petroleum Co said on Wednesday it has agreed to acquire Permian basin-based Percussion Petroleum Operating II Llc in a cash-and-stock deal valued at about $475 million to strengthen its portfolio in the lucrative U.S. shale patch.
Permian is an obvious target for producers looking to increase their inventory. The shale patch, which lies between Texas and New Mexico, has the necessary infrastructure and is known for high productivity and large undeveloped reserves.
Shares of Callon jumped 6% in extended trading to $32.50.
The deal will add about 18,000 net acres and approximately 70 high-return well locations in the Permian, Callon said.
The deal also includes potential contingent payments of up to $62.5 million to Percussion.
Separately, Callon also agreed to sell all its Eagle Ford assets to Ridgemar Energy Operating Llc for $655 million in cash, joining a list of companies that are exiting the area.
"Combined transactions strengthen our capital structure, improve our margins, and lengthen our top-tier Permian inventory," Callon CEO Joe Gatto said in a statement.
Both transactions are expected to close in July 2023.
Callon's board has also authorized, subject to the closing of the transactions, a $300 million share buyback program over a two-year period. (Reporting by Sourasis Bose in Bengaluru; Editing by Shailesh Kuber, Arun Koyyur and Maju Samuel)
