Concho appeared on the Wall Street Radar after the natural-gas company operating in four U.S. states announced ( June 10 , 2008 ) it agreed to buy oil and gas assets from privately-held Henry Petroleum in Texas and New Mexico for $565 million in cash, to expand in the Permian Basin. The properties have 163 bcf and produce about 33 mcf/d of gas equivalent.
Concho says the acquisition will increase the company’s prospects in the Permian Basin by 60%, as Henry’s properties complement Concho’s South-eastern New Mexico asset. The Henry properties currently have eight rigs drilling in the Wolfberry Play and 1,651 identified drilling locations including 1,420 in the Wolfberry Play. Concho has drilled more than 500 wells in the socalled Spraberry/Wolfcamp oil region of West Texas since 2002.
On their conference call, Concho wouldn’t give any kind of guidance until budgets are approved in November, although their debt-to-total capital is expected to increase to 40%.
Comparing Wolfberry play with their other plays, Concho says it’s about 100-125 boe/d with a hyperbolic decline with 1/3 recovered in first couple of years or so. They believe that Wolfberry is less developed than other plays they are involved in and say there is a bit of running room, and reserves are more predictable