Vital Closes Second Acquisition in Permian

Oklahoma-based Vital Energy, Inc. has closed its second acquisition of additional working interests in producing assets from Henry Energy LP, Moriah Henry Partners LLC, and Henry Resources LLC for a total consideration of approximately $78 million.

The acquisition increases Vital Energy’s working interest in 54 producing, low-decline wells by an average of 67 percent, the company said in a news release Monday. It also boosts the company’s estimated 2024 production by approximately 1,850 barrels of oil equivalent per day (boepd), consisting of 51 percent oil, and estimated 2024 Free Cash Flow by approximately $25 million.

"We are pleased to have closed our second transaction to increase our working interests in high-value properties associated with the Henry acquisition", Vital Energy President and CEO Jason Pigott said. "Both transactions were attractively priced, accretive to Free Cash Flow per share and highly supportive of our deleveraging goals”.

The acquisition is the second transaction associated with the exercise of tag-along rights by owners of certain assets in the Henry acquisition. Vital Energy funded the transaction through the issuance of approximately 879,000 shares of its common stock and approximately 980,000 shares of its 2.0 percent cumulative mandatorily convertible preferred securities. The company said it does not anticipate any additional transactions related to the exercise of tag-along rights.

In September 2023, Vital Energy signed three acquisition agreements with affiliates of Henry Energy LP and Henry Resources LLC, Tall City Property Holdings III LLC, and Maple Energy Holdings LLC increasing its footprint in the Permian Basin by nearly 53,000 net acres.

The three agreements had total aggregate consideration of approximately $1.165 billion, subject to customary closing price adjustments, Vital said in an earlier news release. The combined transactions added proved reserves of approximately 248 million barrels of oil equivalent (boe) that are 44 percent oil, estimated as of year-end 2022. The transactions are expected to increase the company’s current production by approximately 35,000 boepd, according to the release.

In December 2023, Vital Energy announced the acquisition of additional working interests in producing assets from Henry Energy LP, Moriah Henry Partners LLC, and Henry Resources LLC for a total consideration of $55 million.

The December acquisition will increase Vital Energy’s working interest in 45 wells by an average of 24 percent, and increase the company’s estimated 2024 production by approximately 1,400 boepd, consisting of 57 percent oil.

"This transaction further demonstrates the opportunities provided by our increased scale in the Permian", Pigot said in an earlier statement. "Our larger operating footprint across the Midland and Delaware basins continues to drive new efficiencies through bolt-on transactions that increase working interest or optimize our development plans by enabling longer laterals. As we successfully integrate these high-value acquisitions we expect to see continued gains in capital efficiency and stronger Free Cash Flow”.

Vital Energy, an independent energy company based in Tulsa, Oklahoma, said its business strategy is focused on the acquisition, exploration and development of oil and natural gas properties in the Permian Basin of West Texas.

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