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RSP Permian (RSPP) to Snap Up Silver Hill Energy for $2.4B


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Upstream energy player, RSP Permian, Inc. (RSPP - Snapshot Report) recently announced its decision to acquire Silver Hill Energy Partners. The transaction value has been estimated at roughly $2.4 billion that includes both cash and stocks. The move reflects RSP Permian’s intention to expand its resources in the Permian Basin in Texas.

Silver Hill Energy has controlling interest in 68,000 gross (41,000 net) acres within the Delaware basin that contributes to about 15,000 net barrels of oil equivalent every day (BOE/D). RSP Permian already operates huge acreages in the Midland Basin that cover almost 63,000 net acres of land. The acquisition will now give the company access to 3,200 gross undeveloped areas in the Delaware. Silver Hill Energy also owns 58 producing wells, of which 49 are horizontal.

The Permian Basin acreage is one of the cheapest for developing U.S’s onshore oil fields. Hence, RSP Permian’s decision to acquire more properties in the region is undoubtedly a prudent one. According to media reports, this deal will likely boost production of RSP Permian by almost 50%. Hence, the transaction will help RSP Permian to generate significant cash flows for shareholders in the long run.  

Silver Hill Energy operates through two entities – Silver Hill Energy Partners LLC and Silver Hill E&P II LLC. The transaction for Silver Hill Energy Partners LLC will likely close by the fourth quarter of 2016, while the buyout of Silver Hill E&P II LLC is anticipated to be completed by the first quarter of 2017.

RSP Permian is not the only energy player focusing more on Permian Basin. Other major players that intend to accelerate drilling activities in the area include Chevron Corporation (CVX - Analyst Report) , EOG Resources, Inc. (EOG - Analyst Report) and Pioneer Natural Resources Co. (PXD - Analyst Report) .



Headquartered in Dallas, TX, RSP Permian currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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