Concho Resources Inc. has entered into a definitive agreement to sell its assets in the New Mexico Shelf to an affiliate of Spur Energy Partners LLC for $925 million.

In addition, the Company’s board of directors authorized the initiation of a repurchase program of up to $1.5 billion of the Company’s shares of common stock.

Tim Leach, Chairman and Chief Executive Officer, commented, 
“Proactively managing our asset portfolio has long been a key part of our strategy. Divesting our New Mexico Shelf position enables us to accelerate the value of these legacy assets, while focusing our portfolio on opportunities with the highest potential for strong returns. Further, the transaction reduces our cost structure and allows us to achieve the leverage target we communicated earlier this year, while delivering additional returns to shareholders under an initial $1.5 billion share repurchase program. The share repurchase program demonstrates our continued confidence in our strategy to generate sustainable oil growth and strong cash flow, and reflects our commitment to delivering long-term value to our shareholders.”

The divestiture includes approximately 100,000 gross acres. Current production from the Company’s Shelf assets is approximately 25 thousand barrels of oil equivalent per day. Following the sale, Concho will maintain a large presence and development program in southeastern New Mexico and will continue to support the local communities in which its employees live and work.

“Over the past decade, our Shelf team has done an excellent job of working safely and maximizing the value of these assets, and we are grateful for their hard work,” commented Tim Leach.

The Company intends to use the proceeds from the transaction to pay down borrowings on its revolving credit facility and initiate the share repurchase program.

The transaction is subject to customary terms and conditions and is expected to close in November 2019.