Oil and natural-gas producer Concho Resources Inc. said Monday it will increase production in the Southwest with the purchase of drilling assets for $225 million in cash.
The Midland, Texas, company said it has agreed to acquire interests in producing and non-producing assets in the Wolfberry trend in the Permian Basin in southeast New Mexico and west Texas. Its ownership in these acquired assets will be between about 20 percent and 100 percent.
Concho Resources said it has identified more than 300 Wolfberry drilling locations with proved reserves of about 16 million barrels of oil equivalents.
The assets are at the core of the Wolfberry trend and in Concho Resources' drilling area, said Tim Leach, chairman, CEO and president.
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"We expect to commence an aggressive drilling program on these assets in 2010 that should result in significant production growth over the next several years," he said.
The deal is scheduled to close in December and Concho Resources said it will update 2010 guidance when its final ownership is determined.
Shares rose 86 cents, or 2.1 percent, to close at $41.50.