10:28 AM EDT, 06/12/2024 (MT Newswires) -- Matador Resources ( MTDR ) is set to spend about $1.91 billion in a deal to expand its footprint in the Delaware Basin oil-producing region of the US, it said on Wednesday.

The firm will acquire a subsidiary of Ameredev II Parent, a portfolio company of private equity firm EnCap Investments, in the deal that includes oil and natural gas assets and undeveloped acreage in Lea County, New Mexico and Loving and Winkler counties in Texas. Matador will also acquire a roughly 19% stake in Pinon Midstream, which has midstream assets in southern Lea County. The deal is expected to be completed late in the third quarter.

"The specific location and quality of the Ameredev assets, the strong existing cash flow, the multi-pay potential and the cost savings associated with developing these assets via longer laterals on multi-well pads on blocky acreage were key features," Matador Chief Executive Joseph Foran said in a statement.

Matador expects to have more than 190,000 net acres in the Delaware Basin and production above 180,000 barrels of oil and natural gas equivalent per day on a pro-forma basis. It also expects proved oil and natural gas reserves exceeding 580 million oil-equivalent barrels and an enterprise value of more than $10 billion. The Pinon stake is set to expand the company's midstream position and offer increased coordination in gathering, transporting and treating natural gas from the Ameredev properties.

Matador forecasts that the deal will generate forward one-year adjusted earnings before interest, taxes, depreciation and amortization of roughly $425 million to $475 million. The company plans to reveal more information on the impact of the deal on its full-year guidance when it releases second-quarter results in July.

"We took significant strides during and shortly after the first quarter of 2024 to strengthen our balance sheet and allow us to participate in another special opportunity like this one," Foran said. "This acquisition also positions Matador for continued success and growth throughout 2024, 2025 and into the future as one of the top ten producers in the Delaware Basin."

In January 2023, Matador agreed to acquire Advance Energy Partners from EnCap Investments for an initial cash payment of $1.6 billion. The deal, which included energy properties and undeveloped acreage in New Mexico and Texas, was completed in April of that year.

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