EOG Resources to buy Yates Petroleum in $2.5 bln deal

EOG Resources Inc (EOG.N) said on Tuesday it would buy privately held Yates Petroleum Corp and some of its subsidiaries and other entities in a deal valued at $ 2.5 billion to boost its assets in the Permian and Powder River basins.

Oil and gas companies, encouraged by an uptick in oil prices, have been buying up acreage in the Permian Basin in west Texas and eastern New Mexico – the nation’s largest shale oil play – as the region is considered among the most cost effective and most viable to drill.

Yates mainly operates in the Permian Basin and the Powder River Basin in Northeast Wyoming.

EOG will issue 26.06 million shares valued at $ 2.3 billion and pay $ 37 million in cash in exchange for Yates Petroleum, Abo Petroleum Corp, MYCO Industries Inc and certain other entities, the companies said.

EOG said it would assume $ 245 million of Yates’ debt and $ 131 million of anticipated cash from Yates.