Vitesse Energy Expands Denver-Julesburg Position With $26 Million Acquisition
Vitesse Energy, Inc. (NYSE: VTS) has completed an acquisition of non-operated oil and gas assets in Colorado’s Denver-Julesburg Basin, adding production and cash flow to its existing portfolio while continuing the company’s strategy of pursuing acquisitions designed to generate returns for shareholders.
The initial unadjusted purchase price for the transaction is $26.0 million, subject to customary purchase price adjustments. Vitesse said the acquisition is expected to be immediately accretive on a per-share basis to earnings, operating cash flow, Free Cash Flow and net asset value.
The newly acquired properties are primarily located in Weld County, Colorado, one of the key producing areas within the Denver-Julesburg Basin. The assets are entirely operated by Chevron, allowing Vitesse to participate in production from established properties without taking on direct operated field responsibilities.
Based on the company’s expectations for the next twelve months following the effective date of the transaction, the acquired assets are expected to generate approximately 900 barrels of oil equivalent per day on a two-stream basis. Oil is expected to represent approximately 28% of the production profile.
The acquisition expands Vitesse’s exposure to an established U.S. oil and gas region while adding a predominantly proved developed producing asset base to its portfolio. According to the company, the properties are expected to contribute production and cash flow without requiring Vitesse to operate the assets directly.
“We are pleased to announce a strategic, non-operated acquisition in the Denver-Julesburg Basin, further strengthening Vitesse’s position in one of the premier oil and gas basins in the United States,” said Jamie Benard, Vitesse’s Chief Executive Officer and President.
Benard said the transaction is expected to be immediately accretive across several of the company’s key financial measures. He added that the acquisition aligns with Vitesse’s approach of pursuing transactions intended to deliver durable and low-risk returns to stockholders.
The transaction was financed using a combination of cash on hand and borrowings under Vitesse’s revolving credit facility. The $26.0 million initial purchase price remains subject to customary adjustments, which may affect the final amount paid in connection with the transaction.
A significant portion of the acquired production has also been hedged through 2030. Vitesse entered into commodity derivative contracts covering a substantial share of the production associated with the acquired assets. The company said the hedging program is intended to support the returns underwritten as part of the acquisition.
The use of commodity derivatives provides the company with a degree of protection against fluctuations in oil and natural gas prices for the hedged volumes. For Vitesse, the arrangements are part of the financial structure surrounding the acquisition and are intended to support the transaction’s expected economic performance over the coming years.
The Denver-Julesburg Basin remains an important oil and natural gas producing region in the United States, particularly in Colorado. Vitesse’s transaction focuses on non-operated interests, a model through which the company can own economic interests in producing assets while relying on an established operator to manage drilling, production and other field activities.
In this case, Chevron is the operator of all of the acquired assets. Vitesse’s ownership therefore gives the company exposure to production from the properties while Chevron retains operational responsibility.
The expected production profile of approximately 900 Boe per day provides a combination of oil and other hydrocarbons. With oil accounting for approximately 28% of expected production, the acquired portfolio provides Vitesse with additional oil exposure alongside its broader non-operated asset base.
Vitesse has built its business around acquiring non-operated interests in oil and gas properties. Under this model, the company can participate in development and production activity undertaken by operating partners while generally avoiding the capital and operational responsibilities associated with being the primary field operator.
The newly completed acquisition is consistent with that strategy. The assets are predominantly proved developed producing properties, which can provide existing production rather than relying solely on future drilling or development activity to generate cash flow.
The transaction also adds to Vitesse’s presence in the Denver-Julesburg Basin, a region that has become a significant component of U.S. onshore oil and gas production. By acquiring producing interests rather than taking on operated assets, the company is maintaining its focus on its non-operated investment model.
Vitesse expects the acquisition to affect several measures of its financial performance. The company specifically identified earnings, operating cash flow, Free Cash Flow and net asset value as measures expected to benefit on a per-share basis. The immediate accretion anticipated by management reflects the company’s assessment of the acquired assets and the purchase price relative to expected production and financial contribution.
The financing structure also enables Vitesse to complete the transaction without relying entirely on a new equity issuance. Cash on hand was combined with borrowings under the company’s existing revolving credit facility to fund the cash consideration.
Commodity price management is another component of the acquisition. Vitesse’s decision to hedge a significant portion of the acquired production through 2030 is designed to provide greater visibility into expected revenues from the covered volumes. The derivatives cover a substantial share of the production expected from the acquired assets and are intended to support the returns used in evaluating the transaction.
For Vitesse, the acquisition represents another step in expanding its portfolio through targeted purchases of non-operated oil and gas interests. The company’s management emphasized that the transaction fits within its disciplined approach to acquisitions and its objective of generating durable returns for shareholders.
The transaction combines several characteristics identified by Vitesse as important to its acquisition strategy: an established producing asset base, exposure to a major U.S. oil and gas basin, a recognized third-party operator, expected production and cash flow contributions, and commodity hedges extending through 2030.
With the transaction now closed, the acquired assets are expected to contribute approximately 900 Boe per day over the next twelve months. Vitesse will retain its non-operated position while Chevron continues to operate the properties.
The $26.0 million initial purchase price, expected production profile and hedging arrangements form the principal components of the transaction announced by the company. Vitesse said the acquisition is expected to be immediately accretive to key per-share financial measures and consistent with its broader strategy of pursuing non-operated oil and gas investments.
The completed acquisition strengthens Vitesse’s position in the Denver-Julesburg Basin and adds a new group of producing interests to its portfolio. As the company integrates the assets into its existing portfolio, their expected production, cash flow contribution and hedged volumes will form part of Vitesse’s ongoing financial and operating performance.
Source Link: https://www.businesswire.com/
