Berry Corp. has executed a definitive agreement to acquire Macpherson Energy Corp., a privately held Kern County, California, operator, for $70 million in cash. The transaction is structured such that $50 million will be paid at closing and the remainder paid in July 2024.
Berry said substantially all the purchase price will come from reallocating $35 million of the company’s planned 2023 capital expenditures and the free cash flow expected from the acquired production.
“The acquisition of these high-quality, low-decline oil-producing properties meets the criteria of our disciplined capital returns strategy—it will be near- and long-term accretive across key financial metrics and increase future free cash flow generation,” said Fernando Araujo, Berry’s chief executive.
“These assets will enable us to optimize our 2023 production plans with greater capital efficiency and enhance future capital allocation flexibility. Further, leveraging Berry’s track record of unlocking value from mature assets with existing wellbores in California, we are confident we can achieve significant production upside, even in the current regulatory environment, as well as significant synergies. .”
The deal will add approximately 2,400 BOE/D (100% oil) in production in 2024. According to Berry, additional upside potential includes production-enhancing opportunities utilizing proven technologies, plus fully permitted steamflood expansion from existing wells, in addition to more than 80 proven undeveloped reserves locations.
The deal is expected to close in the third quarter of 2023.
Established in 1981, Macpherson Energy's oil operations today, including partnerships and joint ventures, comprise more than 400 onshore wells, according to their website.
The free cash flow generated by the combined company in 2024 is expected to be 15 to 25% greater than Berry's standalone.
