Callon to acquire US oil and gas assets from Plymouth Petroleum for $327m

Callon Petroleum has signed an agreement to acquire certain undeveloped acreage and producing oil and gas properties in the US from Plymouth Petroleum for $327m.

The company proposes to fund the complete purchase price with the net proceeds of an equity offering.

As part of the agreement, Callon will acquire about 6,916 gross surface acres, primarily in Howard County, Texas, with more than 75% of acreage offsetting the company’s position in northwest Howard County.

The acquisition will also include 167 gross identified horizontal drilling locations targeting the Wolfcamp A, Lower Spraberry and Wolfcamp B zones.

Upon closing of the acquisition, the company will assume operatorship of more than 90% of the acquired acreage in addition to approximately 82% average working interest in the assets.

Callon's Midland Basin position is expected to include about 40,000 net surface acres, including an approximate 20,000 net surface acres in northwest and central Howard County assuming the closing of the deal.

Callon Petroleum chairman and CEO Fred Callon said: "We are driven to identify opportunities that are underpinned by solid geology and proven well results, and also offer meaningful upside potential through application of new generation completion designs, increased well density and incremental prospective zones.

“We believe this acquisition has all of these attributes and its value proposition is further enhanced due to its immediately offsetting footprint within our WildHorse area, which will allow us to extend laterals within the combined well inventory and leverage infrastructure investments for future programme development."

The acquisition is subject to the completion of customary due diligence and closing conditions and is expected to close on or before 20 October this year.