Vital Energy signs bolt-on deal with privately held Delaware basin operator

Vital Energy Inc., in partnership with Northern Oil and Gas Inc. (NOG), agreed to acquire the assets of Point Energy Partners, a Vortus Investments portfolio company. The deal is expected to increase Vital Energy’s Delaware basin position by 25% to 84,000 net acres.

Under the terms of the agreement, Vital Energy and NOG will acquire Point Energy’s assets in an all-cash deal valued at $1.1 billion. Vital Energy will acquire 80% of the assets, while NOG will pay about $220 million in cash to acquire the remaining 20%. 

The assets, primarily in Ward County, Tex., include about 16,300 net acres with net production of about 30,000 boe/d (67% oil). Some 68 gross inventory locations (49 net) are expected from the deal.

Post closing, the Delaware basin will comprise more than one third of Vital Energy’s oil production.

Going forward with the assets, Vital Energy plans to moderate development activities relative to Point Energy’s recent program. In March 2024, Point Energy turned-in-line (TIL) a 15-well package. No new TILs are planned prior to the deal’s closing, leading to an estimated natural decline in daily production of about 50% from peak rates in April 2024.

With moderated activity levels and natural declines, Vital Energy expects fourth-quarter 2024 production on the asset to average 15,500 boe/d (64% oil). In the quarter, Vital Energy expects to invest $45 million in the acquired assets, operating one drilling rig and completing seven wells.

The one-rig development program is expected to enable the drilling and completion of 12 wells over a 12-month period, resulting in total production of 15,000 boe/d (64% oil) and capital investments of about $100 million.

Subject to customary closing conditions, the acquisition is expected to close by the end of this year’s third quarter.