Contango acquiring Delaware basin acreage

Contango Oil & Gas Co. has agreed to buy interests in about 12,100 gross undeveloped acres in the southern Delaware basin of Texas from a private oil and gas company for as much as $25 million.

The acquisition of half the seller’s interest, about 5,000 net acres in western Pecos County, provides 157 gross potential drilling locations targeting the Permian Wolfcamp A and B and Bone Springs formations.

Contango will pay $10 million in cash at closing and carry well costs of $10 million for 14 months. Additional payments contingent on success could amount to $5 million.

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