8-K: TXO Partners to Acquire White Rock Energy Assets in Williston Basin for $475 Million

TXO Partners, L.P. announces a definitive agreement to acquire oil and gas assets from White Rock Energy, LLC in the Williston Basin for $475 million, expanding its presence in the Elm Coulee field.

Summary

• TXO Partners, L.P. has entered into a purchase agreement to acquire certain oil and gas assets from White Rock Energy, LLC in the Williston Basin of Montana and North Dakota.
• The total consideration for the acquisition is approximately $475 million, consisting of $279.9 million in cash payable at closing and an additional $70 million in cash payable twelve months following closing, subject to customary purchase price adjustments.
• North Hudson Resource Partners LP will acquire a 30% non-operated interest in the White Rock assets as part of the agreement.
• The acquisition is expected to close in the third quarter of 2025, subject to customary closing conditions.
• The acquired assets are expected to add approximately 6,800 daily barrels of oil equivalent production (~93% liquids) and Proved Developed reserves of approximately 25,000 Mboe to TXO, as of April 30, 2025.
• TXO intends to fund a portion of the cash consideration through an underwritten public offering of $175 million of its common units.
• The offering is not conditioned on the consummation of the Acquisition.
• If the Acquisition is not completed, the proceeds from the offering will be used to repay the outstanding borrowings under TXO's revolving credit facility and for general partnership purposes.

Sentiment

Score: 7

Explanation: The document presents a positive outlook on the acquisition, highlighting the benefits of the transaction and the potential for future growth. However, it also acknowledges the risks and uncertainties associated with the acquisition and the public offering.

Positives

• The acquisition is expected to add approximately 6,800 daily barrels of oil equivalent production (~93% liquids) to TXO.
• The acquired assets include Proved Developed reserves of approximately 25,000 Mboe.
• The acquisition complements TXO's existing assets in the Elm Coulee field.
• The strong well economics and development plan provide a pathway for healthy economic returns.
• The acquisition will make TXO a leading oil producer in the Elm Coulee field.
• The Elm Coulee field has an estimated 4 billion barrels of oil in place, presenting a significant target.

Negatives

• The acquisition is subject to customary closing conditions, and there is no guarantee that it will be completed.
• TXO intends to fund a portion of the acquisition through a $175 million public offering of common units, which could dilute existing shareholders.
• The $70 million portion of the purchase price will be deferred and payable one year after the initial closing.

Risks

• The acquisition is subject to customary closing conditions, and there is no assurance that all conditions will be satisfied.
• The public offering of common units is subject to market and other conditions.
• The volatility of oil, natural gas and NGL prices could impact the economic producibility of the acquired reserves.
• Uncertainties about estimated oil, natural gas and NGL reserves, including the impact of commodity price declines on the economic producibility of such reserves, and in projecting future rates of production.
• The success of the acquisition depends on TXO's ability to safely and efficiently operate the acquired assets.

Future Outlook

The acquisition is expected to close in the third quarter of 2025 and is expected to add approximately 6,800 daily barrels of oil equivalent production and Proved Developed reserves of approximately 25,000 Mboe to TXO.

Management Comments

• Brent Clum, Co-Chief Executive Officer, commented that the transaction is the perfect complement to their initial acquisition in the Elm Coulee field and that the strong well economics and development plan provide a pathway for healthy economic returns.
• Gary D. Simpson, Co-Chief Executive Officer, stated that with the acquisition, TXO will become a leading oil producer in the Elm Coulee field and that the Elm Coulee field's rich resource base presents a significant target.

Industry Context

This acquisition reflects a trend of consolidation in the oil and gas industry, with companies seeking to expand their reserves and production through strategic acquisitions. The Williston Basin, particularly the Elm Coulee field, is a prolific area with attractive well economics, making it a desirable target for companies like TXO Partners.

Comparison to Industry Standards

• The acquisition metrics, such as the purchase price per barrel of oil equivalent and the reserves-to-production ratio, can be compared to similar transactions in the Williston Basin to assess the value and attractiveness of the deal.
• Companies like Continental Resources, Hess Corporation, and Marathon Oil have significant operations in the Williston Basin and can be used as benchmarks for comparison.
• The daily production of 6,800 barrels of oil equivalent and Proved Developed reserves of 25,000 Mboe can be compared to the overall production and reserve profiles of other companies operating in the region.
• The horizontal drilling and completion techniques mentioned by management are common industry practices in the Williston Basin, aimed at enhancing reservoir recovery.

Stakeholder Impact

• Shareholders: Potential dilution from the public offering, but also potential for increased production and reserves.
• Employees: Potential for new opportunities and integration of White Rock Energy employees.
• Customers: Continued supply of oil and gas from the acquired assets.
• Suppliers: Potential for new contracts and increased business with TXO Partners.
• Creditors: Potential for repayment of outstanding borrowings under TXO's revolving credit facility.

Next Steps

• Satisfying customary closing conditions for the acquisition.
• Completing the underwritten public offering of common units.
• Integrating the acquired assets into TXO's existing operations.
• Executing the development plan for the acquired assets.

Key Dates

Keywords

acquisition, TXO Partners, White Rock Energy, Williston Basin, Elm Coulee, oil and gas, reserves, production, North Hudson, public offering