Resolute Energy sells Permian Basin mid-stream assets, ready for Delaware Basin expansion

Sale proceeds will be used to reduce debt, fund development in Delaware Basin

ResoluteDenver-based Resolute Energy has sold gas gathering and water handling systems in Reeves County, Texas to an undisclosed Permian Basin midstream company for up to $110 million.

The projects are currently operated by Resolute in its Appaloosa and Mustang project areas, the company said in a press release.

The sale is comprised of two components: 1) a $50 million payment for the assets currently in place and 2) up to $60 million in earn-out payments tied to field drilling activity through 2020 that will deliver gas and produced water into the system.

The proceeds of the sale initially will be used to reduce debt and to fund development activity in Delaware Basin, west Texas properties, according to the release.

Resolute says it has drilled five horizontal wells to TD in Reeves County as part of its current drilling program.

Four of those wells were completed and either producing or flowing back. The fifth well, the South Elephant 02 1004H, had not yet been completed.

Since that release, the South Elephant has been completed, and Resolute’s next two wells, the North Elephant 02 1001H and the Thunder Canyon 0204H, have reached TD.

The rig has moved to the South Goat 02 2204H. The South Elephant, the North Elephant and the South Goat are 10,000 foot Wolfcamp A laterals in the Appaloosa area and the Thunder Canyon is a 7,500 foot Wolfcamp A lateral in the Mustang area.

Resolute’s first 10,000 foot lateral in our Appaloosa area, the North Goat 02 2201H, has established a peak 30-day production rate of 2,116 Boe per day, 60 per cent oil.

Resolute’s fourth well, the North Mitre 02 2101H, another Appaloosa 10,000 foot Wolfcamp A lateral, which was flowing back at the time of our previous report, has established a current peak day rate of 3,269 Boe per day and a current peak 30-day production rate of 2,877 Boe per day, 55 per cent oil.

To date, the South Elephant 02 1004H, has shown a peak day rate of 2,976 Boe per day, 57 per cent oil, although we anticipate that its ultimate peak day rate will be higher.

The well has not yet established its peak 30-day production rate. The North Elephant is currently being completed and the Thunder Canyon is waiting on completion.

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