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Resolute Energy Inks $160M Deal to Expand in Delaware Basin

Zacks Equity Research

Denver-based upstream company Resolute Energy Corporation REN recently inked an acquisition deal worth $160 million to beef up its Delaware Basin acreage.

Per the deal, Resolute Energy will buy 4,600 net acres of undeveloped and producing oil and gas properties in the Reeves County, TX. Half of this acreage, adjacent to Resolute Energy’s operating area in Reeves, currently produces 800 net barrels of oil equivalent per day.

The acquisition will increase the company’s holdings in Reeves by 28% to approximately 21,000 net acres. The deal is scheduled for closure on May 15, subject to satisfactory terms and conditions.

Delaware basin is one of the most productive and economically viable oil and gas fields in the U.S. Resolute Energy has been drilling some of the most successful Wolfcamp wells in the Delaware Basin. The company had also entered into an acquisition deal with Firewheel Energy LLC in Oct 2016 to build up its Reeves holdings by 3,293 acres.

The current acquisition will boost the company’s development plan in the Reeves acreage. Resolute Energy intends to complete all the drilled but uncompleted wells before the closure of the transaction and expects the production to commence from mid-July. To finance the acquisition, the company has entered into a $100 million Bridge financing facility with BMO Capital Markets.

Zacks Rank and Key Picks

Resolute Energy deals with the acquisition, exploration and development of oil and gas properties in the United States. The company is headquartered in Colorado and currently carries a Zacks Rank #3 (Hold).

The company has significantly outperformed the Zacks categorized US Oil and Gas Exploration & Production industry over the past three months. During the period, Resolute Energy’s shares registered growth of around 33%, while the broader industry declined by 11%.

Some better-ranked players in the same industry include Pioneer Natural Resources Company PXD, Range Resources Corporation RRC and Denbury Resources Inc. DNR. All the three companies carry a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Pioneer Natural Resources is expected to generate year-over-year growth of 1,091.05% in earnings in 2017.

Range Resources is expected to post year-over-year growth of 125.71% and 124.73% in revenues and earnings in 2017.

Denbury Resources has reported average positive earnings surprise of 212.50% in the trailing four quarters.

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Range Resources Corporation (RRC): Free Stock Analysis Report
 
Pioneer Natural Resources Company (PXD): Free Stock Analysis Report
 
Denbury Resources Inc. (DNR): Free Stock Analysis Report
 
Resolute Energy Corporation (REN): Free Stock Analysis Report
 
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