TXO Partners, L.P. Announces Entry Into Definitive Agreements for Assets in the Greater Williston Basin
TXO Partners announced the acquisition of assets in the Elm Coulee field, Montana, and the Russian Creek field, North Dakota, for $243 million and 2.5 million TXO common units. The assets, purchased from Eagle Mountain Energy Partners and a private company, will add approximately 4,500 daily barrels of oil equivalent production and 17,000 Mboe of Proved Developed reserves. The transactions, expected to close in Q3 2024, aim to enhance TXO's cash flow and distributions. CEO Bob R. Simpson highlights the strategic fit and potential high returns, while CFO Brent Clum emphasizes the assets' alignment with TXO's capital allocation strategy.
- Acquisition adds 4,500 daily barrels of oil equivalent production.
- 17,000 Mboe of Proved Developed reserves included.
- Transaction expected to be accretive to cash flow and distributions.
- Purchase price of $243 million and 2.5 million common units.
- Strategic return to Elm Coulee field, a region of past success.
- Transaction subject to customary closing conditions, adding uncertainty.
- Significant cash outlay of $243 million.
Insights
The acquisition by TXO Partners, L.P. for a total of
From a financial perspective, the acquisition's potential to be accretive to cash flow and distributions is a critical point. Adding approximately 4,500 daily barrels of oil equivalent production and 17,000 Mboe of proved developed reserves can enhance TXO’s revenue streams. These metrics indicate a substantial boost to the company's production capacity and reserve base, underscoring the acquisition's value in strengthening operational stability.
Considerations for investors include the inherent risks of asset integration and the successful application of TXO’s technology to optimize returns. However, TXO’s leadership has a proven track record in the Elm Coulee field, which mitigates some risk factors. Investors should monitor the third-quarter closing timeline and any subsequent financial disclosures for further insights into the transaction’s impact.
This acquisition signals a strategic re-entry into markets where TXO has previously experienced success. The Elm Coulee and Russian Creek fields are known for their robust production capabilities, which enhances TXO’s market position in the oil sector. The addition of high-margin, low-decline rate assets positions TXO favorably against competitors, as these attributes are highly sought after in the current energy market.
From a market perspective, the timing of this acquisition could be advantageous. The energy sector has been characterized by volatility, but assets with low decline rates and high margins offer more stability. This strategic move may also reflect TXO’s confidence in the long-term prospects of the oil market, suggesting a potential upswing in future demand or favorable pricing conditions.
For retail investors, it’s essential to recognize the growth potential embedded in this transaction. While the initial outlay is significant, the expectation of high returns and equity value creation aligns well with the long-term investment horizon. Monitoring market reactions and industry trends will provide further context on the acquisition’s success.
“TXO uniquely operates as a production and distribution entity, which focuses on cash flow from our legacy assets. As significant owners, our leadership is focused, determined and disciplined,” stated Bob R. Simpson, Chairman and CEO. “This acquisition in the Elm Coulee field represents the return to a region where our team previously had success. We expect the significant oil-in-place targets, with the application of our technology, to create equity value while delivering high returns.”
“With an eye to a stronger future, we have diligently looked at many candidates in the last seventeen months as a public company. We believe the combination of these two assets fits perfectly with our expertise and capital allocation strategy. These transactions provide the right blend of low decline rate, high margin and growth potential for TXO,” commented Brent Clum, the President of Business Operations and CFO. “We expect these assets to be accretive on every relevant measure, but most importantly to cash flow and distributions. It’s a natural evolution to creating equity value.”
Each of the transactions are expected to close in the third quarter of 2024, subject to satisfaction of customary closing conditions. If consummated, the transactions are expected to add approximately 4,500 daily barrels of oil equivalent production (~
TXO’s counsel in connection with the Acquisitions is Welborn Sullivan Meck & Tooley, P.C. EMEP’s financial advisor for the sale of its assets to TXO is Jefferies LLC and its counsel is O'Melveny & Myers LLP.
About TXO Partners, L.P.
TXO Partners, L.P. is a master limited partnership focused on the acquisition, development, optimization and exploitation of conventional oil, natural gas, and natural gas liquid reserves in
Cautionary Statement Concerning Forward-Looking Statements
Certain statements contained in this press release constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include the words such as “may,” “assume,” “forecast,” “could,” “should,” “will,” “plan,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project,” “budget” and similar expressions, although not all forward-looking statements contain such identifying words. These forward-looking statements include statements regarding the pending acquisitions, including our ability to satisfy the conditions to closing and the expected timing and benefits of the acquisitions, our financing of the acquisitions, our strategy, descriptions of future operations, prospects, plans and objectives of management, future cash flow and distributions and our ability to execute our strategy, . These forward-looking statements are based on management’s current belief, based on currently available information, as to the outcome and timing of future events at the time such statement was made, and it is possible that the results described in this press release will not be achieved. Our assumptions and future performance are subject to a wide range of business risks, uncertainties and factors, including, without limitation, the following: our ability to consummate the proposed acquisitions on the terms currently contemplated; our ability to meet distribution expectations and projections; the volatility of oil, natural gas and NGL prices; our ability to safely and efficiently operate TXO’s assets; uncertainties about our estimated oil, natural gas and NGL reserves, including the impact of commodity price declines on the economic producibility of such reserves, and in projecting future rates of production; and the risks and other factors disclosed in TXO’s filings with the SEC, including its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Any forward-looking statement speaks only as of the date on which it is made, and, except as required by law, TXO does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
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TXO Partners
Brent W. Clum
President, Business Operations & CFO
817.334.7800
ir@txopartners.com
Source: TXO Partners, L.P.
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