Concho Resources to Acquire RSP Permian in $9.5 Billion Stock Deal

Published: March 28, 2018 | Share This

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Concho Resources Inc. and RSP Permian, Inc. have entered into a definitive agreement under which Concho will acquire RSP in an all-stock transaction valued at approximately $9.5 billion, inclusive of RSP’s net debt. The transaction was unanimously approved by the board of directors of each company.

“This transaction provides a compelling opportunity for both Concho and RSP shareholders to benefit from the strength of our combined company. The RSP team built an exceptional high-margin asset portfolio consistent with our playbook – large, contiguous positions in the core of the Permian Basin. And they did so with a strategy of maximizing well performance and returns, which provides substantial running room for continuous development with large-scale projects,” said Tim Leach, chairman and chief executive officer of Concho.

This combination allows us to consolidate premier assets that seamlessly fold into our drilling program, enhance our scale advantage and reinforce our leadership position in the Permian Basin, all while strengthening our platform for delivering predictable growth and returns. We look forward to welcoming RSP’s employees as members of the Concho team,” added Leach.

“I am extremely proud of the RSP team and the high-quality position we built in the Permian Basin. As RSP has grown and we have seen the resource play develop in the Permian, we have come to recognize that combining with a company with the scale, investment grade balance sheet and operational excellence of Concho will unlock even more value for shareholders. The combined company will have the vision and necessary financial strength to efficiently develop the tremendous resource potential of these assets with large-scale projects,” said Steve Gray, chief executive officer of RSP.

The acquisition will add approximately 92,000 net acres that strongly complement Concho’s existing acreage position in the Permian Basin. The combined position will cover more than 640,000 net acres. In fourth-quarter 2017, production on RSP’s assets totaled approximately 55.5 thousand barrels of oil equivalent (Boe) per day on a two-stream basis, of which approximately 80 percent was crude oil and 20 percent was natural gas. The transaction adds 2.2 billion Boe of resource potential, of which more than two-thirds is premium resource.

The combined company will run the largest drilling and completion program in the Permian Basin. With a focused portfolio and substantial scale advantage, the benefits of this transaction are expected to drive corporate level savings and operational synergies by combining the complementary assets and the technical skills of both company’s employees. Specific operational synergies include: asset optimization, directing capital to high-return manufacturing-style projects and utilizing shared infrastructure systems. The present value of corporate and operational synergies is expected to exceed $2 billion.

HIGHLIGHTS

• Large, highly-complementary acreage expands Concho’s strategic portfolio in the Permian Basin to
approximately 640,000 net acres

• Reinforces leadership position as the premier Permian pure-play company and creates the largest crude oil and
natural gas producer from unconventional shale in the Permian Basin

• Combined company to run the largest drilling program in the Permian Basin with 27 rigs

• Meaningfully expands premium resource base

• Drives significant operational synergies through development optimization, shared infrastructure and capital
efficiencies, with a present value of more than $2 billion

• Expect to realize over $60 million in annual corporate level savings

• Immediately accretive to key per-share metrics, including net asset value, earnings, cash flow and debt-
adjusted growth

• Expect to maintain investment grade credit ratings

• Enhances Concho’s three-year annualized production growth outlook within cash flow from operations

About Concho Resources
Concho is an independent oil and natural gas company engaged in the acquisition, development, exploration and production of oil and natural gas properties. Concho’s operations are focused in the Permian Basin of Southeast New Mexico and West Texas.

To stop by Concho Resources’ website, CLICK HERE

About RSP Permian
RSP is an independent oil and natural gas company focused on the acquisition, exploration, development and production of unconventional oil and associated liquids-rich natural gas reserves in the Permian Basin of West Texas. The vast majority of RSP’s acreage is located on large, contiguous acreage blocks in the core of the Midland and Delaware Basins, sub-basins of the Permian Basin.

To stop by RSP Permian’s website, CLICK HERE

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