Extraction Oil & Gas, Inc. (NASDAQ:XOG), (“Extraction,” or the “Company”), an oil and gas exploration and production company with primary assets in the Wattenberg Field in the Denver-Julesburg Basin of Colorado (“the DJ Basin”), today announced that it has recently closed on two separate transactions from unrelated sellers to acquire approximately 16,800 net acres in the DJ Basin for aggregate cash consideration of $177 million. Net proceeds from the Company’s private placement of common stock announced today will be used, in part, to replenish cash used to pay for the acquisitions. The acquisitions include de minimis oil and gas production and approximately 425 net 1-mile equivalent drilling locations, with offsetting results from other operators that are comparable to some of the best wells in the Wattenberg Field. Extraction believes, based on management’s current assumptions and estimates, that economic breakeven prices will be below $45 per barrel (WTI) across the majority of the acreage. The sellers were not disclosed.
September 30, 2016 liquidity pro forma for the closing of our IPO, the October 2016 Bayswater acquisition and the two DJ Basin acquisitions today and net proceeds from the common stock offering was approximately $1,094 million, consisting of $644 million in cash and cash equivalents and $450 million of availability under our revolving credit facility.
Commenting on recent events, Extraction’s Chairman and CEO Mark Erickson said: “Extraction remains in a strong financial position with ample liquidity and balance sheet flexibility. We intend to use the remaining $265 million of proceeds from today’s private placement to selectively add to our DJ Basin leasehold position. As discussed in our recent guidance conference call, Extraction intends to opportunistically continue to add to its premier DJ Basin acreage position and is actively evaluating several opportunities that meet its investment criteria.
“As provided in our formal guidance, Extraction has already budgeted $60 million to $80 million, which is not included in the $265 million of additional liquidity, for further organic leasing. In the near-term, we believe that we are positioned to add substantially to our existing high-quality drilling location inventory. Extraction is currently targeting assets that have demonstrated top-tier well results with a particular focus on more rural areas, oily areas in the Basin that are characterized by lower gas-oil ratios (GOR) and are more oil-prone. These oil-prone areas should substantially benefit from the application of our new and evolving enhanced completion techniques.”