Callon Petroleum Acquires 35,000 Acres In The Permian For $20,000 / Acre -- August 5, 2021

Callon Petroleum: new acquisition in the Permian, link here.

The lede:

Callon Petroleum Co. disappointed investors with its biggest-ever acquisition aimed at expanding in America’s most prolific shale patch.

The Houston-based oil explorer agreed to buy closely held Primexx Energy Partners Ltd. for about $788 million in cash and stock, while separately agreeing to swap debt for equity with Callon’s largest shareholder, Kimmeridge Energy Management Co. Callon lost almost one-fifth of its market value as the stock posted its steepest daily loss in more than a year.

“The deal does come with increased gross debt near term,” JPMorgan Chase & Co. analysts including Arun Jayaram wrote Wednesday in a note to investors. With more than 9 million shares issued to Primexx owners and another 5.5 million deployed in the debt-for-equity swap, Callon investors are seeing a 31% dilution as well, according to the bank.

The deal:

• $788 million in cash and stock
• 35,000 net acres in Reeves County of west Texas
• apparently Reeves County sits atop both the Midland and the Delaware basins
• $788 million / 35,000 net acres = $20,000 / acre (rounding)
• to pay for this, a 31% dilution of outstanding stock, as well as the cash the company will need to pay for this transaction

Note:

• Callon acquired Permian rival Carrizo Oil & Gas, Inc, for $736 million two years ago.