Devon Spends $2.6 Billion to Expand Delaware Basin Footprint
Devon Energy said it acquired 16,300 net undeveloped acres in the core of the Delaware Basin in New Mexico for roughly $2.6 billion in a Bureau of Land Management lease sale, marking one of the company’s largest recent acreage additions in the Permian Basin.
The acreage, located in Lea and Eddy Counties, was purchased for about $161,500 per net acre and is expected to add around 400 net drilling locations normalized to two-mile laterals, according to the company. Devon said the deal enhances its premier position in the Delaware Basin and extends the life of its drilling inventory.
The company highlighted several advantages tied to the federal leases, including lower royalty burdens and a high net revenue interest of 87.5%, which it said compares favorably with many state and private leases in the region. Devon also emphasized that the contiguous acreage position would support longer laterals, multi-well pad development, and lower development costs.
CEO Clay Gaspar described the lease sale as a “rare and compelling opportunity” to secure large-scale, high-quality acreage in one of the most productive oil regions in North America. He said the acquisition was evaluated based on rock quality, infrastructure access, and shareholder value creation.
The announcement comes just weeks after Devon completed its merger with Coterra, a transaction the company said strengthened its understanding of the basin and reinforced confidence in the acquired inventory. The combined company is seeking to consolidate its position in the Delaware, where producers continue competing for top-tier drilling locations amid expectations of sustained U.S. shale output growth.
The Delaware Basin, the most prolific oil-producing sub-basin of the Permian, has remained a focal point for consolidation and acreage acquisitions as operators pursue scale, longer laterals, and lower breakeven costs. Federal lease sales in New Mexico have become increasingly competitive due to the limited availability of premium undeveloped acreage.
Devon said the acquisition would be funded with cash on hand while maintaining its balance sheet strength and commitment to shareholder returns, including its recently announced $8 billion share repurchase program.
By Charles Kennedy for Oilprice.com
Matador Expands Delaware Basin Footprint in $1.1 Billion Lease Deal
Matador Resources said Thursday it had secured 5,154 net undeveloped acres in the “core-of-the-core” of the Delaware Basin through a U.S. Bureau of Land Management lease sale, marking a major expansion of its New Mexico shale position.
The Dallas-based producer said the acquisition, valued at approximately $1.143 billion, would add more than 141 net operated drilling locations when normalized to two-mile laterals and provide access to at least nine prospective formations across the acreage package.
CEO Joseph Foran described the transaction as a strategic bolt-on acquisition designed to extend the company’s high-quality inventory while improving operational efficiency through adjacency to existing operated units. The acreage is expected to support longer laterals of three miles or more and integrate with Matador’s current infrastructure and field operations in the region.
The newly acquired leases carry a 10-year term and an 87.5% net revenue interest, terms that Matador said improve project economics relative to many legacy federal leases.
The deal also has implications for the company’s midstream business through San Mateo Midstream, Matador’s joint venture infrastructure platform. The company said several tracts are located near existing gathering and processing systems and could increase throughput volumes and future midstream revenues.
Matador intends to fund the acquisition using cash on hand and borrowings under its credit facility. The company said it has already repaid its reserve-based lending facility and expects adjusted free cash flow to approach $1.2 billion in 2026 under prevailing commodity price assumptions, giving it a path to materially reduce acquisition-related debt by year-end and fully repay the facility in the first half of 2027.
The acquisition underscores the continued competition for premium acreage in the Delaware Basin, the most productive sub-region of the Permian Basin, and the centerpiece of U.S. shale growth. While industry-wide consolidation has accelerated in recent years through multibillion-dollar corporate mergers, Matador’s transaction reflects a parallel trend of operators pursuing targeted bolt-on acreage to extend inventory life and improve capital efficiency.
Matador pointed to its prior federal acreage acquisitions in the Delaware Basin, including the State Line and Rodney Robinson tracts acquired in 2018, as evidence of its ability to generate returns from similar transactions. The company said those assets have already repaid associated acquisition and development costs while generating an additional $1.9 billion in returns.
Matador primarily operates in the Delaware Basin of West Texas and southeastern New Mexico, with additional operations in Louisiana’s Haynesville shale.
By Charles Kennedy for Oilprice.com
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