Back in January of this year, Luxe Energy LLC announced it had acquired about 18,000 net acres in the core of the Delaware Basin from two separate sellers for an undisclosed amount. Luxe is backed by private equity firm Natural Gas Partners.
The sellers included Endeavor Energy Resources LP and Finley Resources Inc. The acreage is situated in the Delaware’s over-pressured oil window in Reeves and Ward counties. Luxe acquired certain undeveloped acreage and producing oil and gas properties and the current net production was disclosed then to be about 1,000 barrels of oil equivalent per day (boe/d).
Street sources report the amount paid was about approximately $15,000 per acre or about $270 million dollars.
Fast forward to July 13th and Diamondback Energy, Inc.,(NASDAQ:FANG) announced the company bought nearly 20,000 net acres for $560 million from Luxe Energy in the Delaware Basin. At a price of $27,000 per acre, Diamondback has set a high point in the Delaware Basin where recent acreage has sold at prices ranging from $10,000 to $20,000.
When Luxe received $500 million in equity from Natural Gas Partners back in May 2015, at that time the Austin, Texas-based company said it planned to initially focus on West Texas and apply technologies such as long-reach horizontal drilling and multistage fracking.
Luxe doesn’t appear to have drilled any wells and instead seized the opportunity to pocket a quick profit estimated at $290 million dollars. Congratulations to the management team at Luxe Energy.