Matador Resources, a Dallas-based energy independent, announced Wednesday that it has agreed to the $1.905 billion acquisition of Delaware Basin assets from Ameredev II Parent LLC, a portfolio company of EnCap Investments.
The bolt-on acquisition of production acreage, expected to close by the end of Q3 2024, also includes a 19 percent interest in Piñon Midstream, a New Mexico pipeline and gas treatment operation that connects upstream production to both downstream distribution and carbon capture and sequestration facilities.
After closing, Matador is expected to hold more than 190,000 acres in the Delaware Basin representing production of more than 180,000 barrels of oil and natural gas equivalent. The Amedev assets acquired include 33,500 of “highly contiguous” net acres — most of it located in Matador’s Antelope Ridge asset area in southern Lea County, New Mexico and Matador’s West Texas holdings in Loving and Winkler Counties.
The deal is expected to generate forward one-year adjusted EBITDA of $425 to $475 million at last May strip prices, representing a purchase price multiple of 4.2x. The deal also represents Matador’s pro forma leverage at 1.3x at closing, which is expected to decline to 1.0x by mid-2025.
Matador says the all-cash transaction is being financed through a 50 percent increase — from $1.5 billion to $2.25 billion — in the elected commitment, at closing, to an existing resources-based credit facility led by PNC Bank, along with a $250 million term loan.
The deal is the second major transaction between Matador and EnCap for Delaware Basin assets in the past 18 months. In January 2023, Matador paid $1.6 billion to EnCap-backed Advance Energy Partners Holdings for production acreage in Lea County, New Mexico and Ward County, Texas.
Matador founder and CEO Joseph Wm. Foran credited a personal relationship for the smooth closing of last year’s transaction, as well as a factor in the negotiations.
“Gary Petersen, one of EnCap’s Founders, and I have known each other for many years,” said Foran in announcing the Ameredev deal. “Similar to the Advance Energy transaction we closed in April of 2023, the long relationship with Gary and EnCap was critical to the smooth negotiation of this transaction.”
As in that 2023 transaction, Matador was advised by a Baker Botts team led from Dallas by partners Preston Bernhisel and Jon Platt; the EnCap entities were counseled by a Vinson & Elkins team led by Bryan Loocke.
At Baker Botts, Bernhisel and Platt were supported by corporate associates Rusty Shellhorn and Maddie Boezinger. Dallas partner Steve Marcus and senior associate Jordan Hahn advised on tax issues, while partner Luke Weedon, senior associate Brittany Simington and associate Morgan Copher, all from Dallas, counseled on finance.
Partner Jeff Wood in Washington, D.C., counseled on environmental issues, along with senior counsel Aileen Hooks and associate Katie Jeffress, both in Austin. Partner Jason Loden and special counsel Cynthia Uduebor advised on employee and labor issues from Dallas. Midstream diligence issues were reviewed from Houston by partner Scott Looper, along with associates Kat Iverson, Louise Stephens, Andrew Crayden and Gabbi Feldman. And from Washington, D.C., partner Jeffrey Oliver and special counsel Michael Brodsky advised on antitrust.
The Vinson & Elkins M&A team led by Loocke included senior associate Michael Zarcaro, with assistance from associates Brad Oster and Darren Fox. Other key team members include partners Megan James, Todd Way and John Lynch, senior associate Dan Henderson and associates Adam Bateman, Ryan Dolmanet and Patrick Darby on tax; partners Ron Tenpas, Matt Dobbins and Patrick Traylor and associates Milton Padilla, Aaron Silberman, Alyssa Sieja and Kelly Rondinelli on environmental issues; partners David D’Alessandro and Shane Tucker and senior associate Brian DeShannon on executive compensation and benefits; partner Becky Baker on employment and labor issues; partners Hill Wellford and Kara Kuritz and counsel Evan Miller on antitrust issues; partner Damien Lyster and associate Reagan Lutter on energy regulatory; partners Matt Strock, Mike Marek, Jackson O’Maley and Doug McWilliams, senior associate David Lassetter and associate Kelli Westmoreland on corporate; and partner Sarah Mitchell and senior associate Alexander Baker on insurance.
In-house counsel at Matador included Bryan Erman, Bradley Hart and Cale Curtin.
JP Morgan served as financial advisor to Ameredev and EnCap.