Current LLEX Stock Info

Acquires 4,000 net Delaware basin acres from private seller at rock-bottom prices

Despite a recent leveling off of drilling activity in the U.S., money continues to pour into the Permian basin.

Last week Lilis Energy (ticker: LLEX) announced that it had acquired over 4,000 net acres from a private seller, adding to its Delaware basin holdings. The acreage acquired is very contiguous, and compliments the holdings Lilis already owns, the company said in a press release.

While the company did not report the production of the new acreage, it did report that it is now producing a total of 2,952 BOEPD net.

Lilis Adds Permian Acreage

Source: Lilis Energy

Lilis paid $45.6 million to a private seller for this acreage, though it did not disclose the identity of the seller. This equates to an implied acreage valuation of $11,400/acre. While this valuation is higher than could be expected in other basins, it is significantly lower than some transactions seen in the Permian earlier this year, when valuations regularly exceeded $20,000/acre.

Lilis now holds a net 15,250 acres in the Delaware Basin, mostly in Winkler County. The company has over 900 net drilling locations, 150 of which were acquired in this deal. The company also announced the results of its first new well, the Wildhog. This well targets the Wolfcamp B, using a 4,600 foot lateral. Lilis reports that this well reached a 24-hour IP of 997 BOEPD, or 219 BOEPD per 1,000 feet.

This well is notable as it is the first new well drilled by Lilis, all previous activity consisted of re-entry into older wells. The company reports that Wildhog is comparable to other offset wells in terms of IP per 1,000 feet, as the median offset Wolfcamp B well has an IP of 175 BOE per 1,000 feet.

Current revolver and cash will fund acquisition

Lilis will fund the acquisition using its second lien term loan with Varde Partners, and will not need to raise additional debt or equity. The company reports that its forecasted liquidity and future cash flows will be sufficient to fund this acquisition and its planned development through 2018. In addition, Lilis has entered into a hedging position recently, and intends to begin a full hedging program in the near future.

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