Vital Energy Boosts Production & Profits In Permian Basin Through Strategic Buyout

Zinger Key Points
  • Vital Energy boosts working interest in 45 wells, enhancing 2024 production by 1,400 BOE/d.
  • The $55 million transaction is expected to increase 2024 Free Cash Flow by around $20 million.

Yesterday, Vital Energy, Inc. VTLE disclosed the buyout of an additional working stake in producing assets related to the recent asset acquisition from Henry Energy LP, Moriah Henry Partners LLC, and Henry Resources LLC for total consideration of $55 million.

The transaction is projected to boost Vital Energy's working interest in 45 wells by an average of 24%, thereby enhancing its estimated 2024 production by about 1,400 BOE/d (57% oil). 

The transaction is expected to boost the company's 2024 Free Cash Flow by about $20 million.

Jason Pigott, President and Chief Executive Officer, said, "This transaction further demonstrates the opportunities provided by our increased scale in the Permian."

"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."

The transaction is related to the exercise of tag-along rights by owners of certain assets in the Henry acquisition that aids the company in purchasing and financing the assets on the same terms as the Henry purchase and sale agreement, in which the shares were issued at $54.96. 

VTLE plans to fund the buyout by issuing 627,000 common shares and 595,000 shares of its 2.0% cumulative mandatorily convertible preferred securities.

As of November 1, 2023, VTLE's senior secured credit facility remained undrawn and had cash and cash equivalents of $611 million.

Price Action: VTLE shares closed higher by 1.46% at $45.03 on Thursday.

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