Callon Petroleum Company (NYSE:CPE) is committing $327 million to acquire oil and gas properties in Midland Basin, West Texas, from Plymouth Petroleum. The seller is a unit of Element Petroleum, which is backed by ArcLight Capital Partners.

The oil and gas properties that Callon is acquiring from the affiliate of Element cover 5,667 net acres. The properties have an estimated reserve of 12.2 million barrels of oil equivalent, with oil making up 87% of the estimated reserve.

Currently, 2,300 barrels of oil equivalent are being pumped out of the properties per day, with oil making up 86% of the output.

What’s CPE paying per acre?

Analysts have done the math and say that in the latest Midland Basin acquisition, Callon is paying $45,527 for every undeveloped acre and that is considered to be a high price. The cost per acre is not only at the high end of the price range the parties to the deal had announced, but also tops the $41,500 per acre price that some analysts believed was a reasonable valuation.

Nevertheless, the high price being paid for the properties appears to be justified by the strong returns on the wells, which is cited in the range of 32% to 42%.

Callon plans to fund the acquisition with the net proceeds from its equity offering. The company has priced a $436 million equity offering. Callon also has a credit facility that it can tap into to fund the acquisition if there is a need for additional cash.

Though Callon appears to be paying a premium price for the assets it is acquiring from Element, it is not the only one buying oil and gas properties in the Midland Basin. Last month saw Concho Resources commit to acquire certain oil and gas assets in the Midland Basin for $1.625 million from Reliance Energy. Another recent investor in the region is Sabalo Energy, which sank an undisclosed amount of money to pick up oil and gas properties in Howard County from a seller called Finley Resources.