Vital Energy to Significantly Increase Permian Basin Scale

Vital Energy, Inc. (NYSE: VTLE) (“Vital Energy” or the “Company”) today announced the signing of three definitive agreements that will materially add scale in the Permian Basin, increase Free Cash Flow, enhance capital efficiency and significantly reduce leverage. Combined, the transactions have a total consideration of approximately $1.1653 billion, subject to customary closing price adjustments. The agreements were signed with affiliates of Henry Energy LP and Henry Resources LLC (“Henry”), Tall City Property Holdings III LLC (“Tall City”) and Maple Energy Holdings, LLC (“Maple”). The transactions, which are subject to customary terms and conditions, are all expected to close in the fourth quarter of 2023. 

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Vital Energy Wells Drilled 2023

Detailed lists of wells drilled by Vital Energy in 2023

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Detailed list of Operators that are active in the Permian Basin


Increases scale: The combined transactions will add nearly 53,000 net acres and proved reserves of approximately 248 million barrels of oil equivalent4 (“BOE”), 44% oil, estimated as of year-end 2022. The transactions will increase Vital Energy’s current production by approximately 35.0 MBOE/d (50% oil). Pro forma, Vital Energy will have approximately 250,000 net acres and estimated average full-year 2024 total production of approximately 112.0 MBOE/d, an increase of more than 25% versus stand alone expectations. Estimated average full-year 2024 oil production is expected to increase approximately 30% to 55.0 MBO/d.

Adds high-value, oil-weighted inventory: Transactions to add approximately 150 gross high-value locations with an average breakeven price of approximately $50 per barrel WTI. Pro forma, Vital Energy will maintain more than eight years of oil-weighted inventory at its expected four-rig pace of development.

Immediately accretive to key financial metrics: The acquisitions and pro forma development plan are expected to increase the Company’s 2024 Free Cash Flow by approximately 90%, at $80 per barrel WTI. Improvements to capital efficiency are expected to be recognized in 2024 and be sustainable in the future.

1Non-GAAP financial measure; please see supplemental discussion of GAAP to non-GAAP financial measures at the end of this release;
2Assumes $80 WTI / $3.40 HH for FY-24; 3Assumes VTLE September 12, 2023 closing price; 4Henry’s YE-22 reserves converted to 3-stream

Attractively priced and highly deleveraging: The combined transactions are attractively priced at 2.9x next 12 months Consolidated EBITDAX1, as of the effective dates. Post closing, Vital Energy plans to direct substantially all Free Cash Flow to debt reduction and expects pro forma leverage, at $80 per barrel WTI, to be approximately 1.0x Net Debt/Consolidated EBITDAX1 by year-end 2024.

“These transactions increase our scale in the Permian and fit with our proven strategy of creating value through disciplined acquisitions,” said Jason Pigott, President and Chief Executive Officer. “We have demonstrated our ability to effectively consolidate Permian assets and identify sustainable synergies to lower costs, improve margins and enhance Free Cash Flow. These acquisitions will significantly strengthen our Free Cash Flow outlook and enable us to rapidly delever our balance sheet.”

Transaction Financing

Total consideration for the transactions is approximately $1.165 billion. Vital Energy plans to fund the transactions through the issuance of approximately 8.61 million shares of its common stock, 4.54 million shares of perpetual mandatorily convertible preferred securities, approximately $285 million in borrowings under its senior secured facility and approximately $100 million of estimated purchase price adjustments.

The Company has consistently used a balance of equity and debt to finance high-value acquisitions to strengthen the business. Year-to-date, Vital Energy has executed $1.7 billion of acquisitions (including today’s) which have utilized a combined total of approximately 50% equity and 50% debt.

Concurrent with closing, Vital Energy’s credit facility borrowing base and elected commitment will increase to $1.5 billion and $1.25 billion, respectively, from $1.3 billion and $1.0 billion, respectively. The Company will have access to the full $1.5 billion borrowing base through a committed $250 million term loan facility.

Henry: Vital Energy agreed to purchase substantially all of Henry’s Midland and Delaware basin assets in an all-equity transaction consisting of 3.72 million common shares and 4.54 million shares of perpetual mandatorily convertible preferred securities, net of customary closing price adjustments. Effective date of the acquisition will be August 1, 2023.

Tall City: Vital Energy agreed to purchase all of Tall City’s Delaware Basin assets for $285 million in cash and 1.58 million common shares, net of customary closing price adjustments. Effective date of the acquisition will be July 1, 2023.

Maple: Vital Energy agreed to purchase all of Maple’s Delaware Basin assets in an all-equity transaction consisting of 3.31 million common shares, net of customary closing price adjustments. Effective date of the acquisition will be August 1, 2023.

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