Magnum Hunter Sells Bakken Acreage - $84.7-Million

November 4, 2014 Kirk Eggleston

Magnum Hunter Resources' Bakken Acreage Map

Houston, TX-based Magnum Hunter Resources has sold a large chunk of its Bakken acreage for $84.7-million to an undisclosed buyer.

The deal, which closed in mid October of this year, included non-operated working interests in ~105,661 gross (12,500 net) leasehold acres in Divide County, ND. The divested properties currently account for net average production of ~720 boe/d.

“In a prepared statement, CEO Gary Evans described the sold Bakken assets as non-core. “Our remaining portfolio of assets located in North Dakota consists of 151 gross producing wells covering approximately 159,916 gross (73,690 net) acres, said Evans. Total net production to the Company from these remaining assets is currently approximately 2,577 boe/d at present with another ~800 boe/d anticipated to be put on production prior to year-end from this region.”

According to company officials, total divestitures, including this one, have amounted to $210-million across Magnum Hunter's portfolio so far in 2014. In the second quarter of 2013, the company sold 19,000 net acres in the Eagle Ford to Penn Virginia for approximately $400-million. The deal was for the majority of the company’s Eagle Ford holdings.

Magnum Hunter's divestment strategy is designed to shift the company's focus to growth in the Marcellus Shale and Utica Shale in West Virginia and Ohio.

SM Energy Grabs 61,000 Bakken Net Acres - $330 Million

July 30, 2014 Kirk Eggleston

In late July of 2014, SM Energy announced it will acquire approximately 61,000 net acres in Divide and Williams Counties for $330-million from Baytex Energy. The acreage is directly adjacent to the company's Gooseneck focus area. Upon closing, the company will have ~97,000 acres in the area.

Company officials say the acquisition is expected to add significant drilling inventory, and includes interests in 126 drilling spacing units, 81 of which will be operated by SM Energy. Net production from the acreage is ~3,200 boe/d (91% oil, 1,500 BTU rich gas). The properties are 90% operated and approximately 70% held by production. Working interest for operated spacing units is expected to range between 37.5% – 50.0%

Directly adjacent to the acquisition area, SM Energy noted improvements in its Three Forks program recently due to faster drilling times and improved completions. Current data reflects recent wells have higher sustained production rates than older wells.

The transaction has an effective date of July 1, 2014, is expected to close by the end of the third quarter of 2014, and is subject to customary closing conditions and adjustments. The Company expects to fund the acquisition with cash on hand and borrowings under its existing credit facility.

SM Energy Trading Two Bakken Rigs For One Walking Rig

May 6, 2013 R.T. Dukes

SM Energy plans to drop from running four Bakken rigs to three later in the year. Two rig contracts are up and the company will be trading two for one.

The rig coming in will be a walking rig capable of drilling multi-well pads.

Bakken production was up 3% on the quarter and 18% from this time last year to 12,200 boe/d. The focus of drilling is in the Raven, Bear Den, and Gooseneck prospects in Divide, McKenzie, and Williams counties in North Dakota.

SM Energy completed 11 gross wells on its operated acreage during the quarter.

Read the full press release at sm-energy.com

Continental Resources - Samson Bakken Deal Agreed for $649 Million

December 21, 2012 R.T. Dukes

Continental Resources (CLR) has reached an agreement to pay $649 million for almost 120,000 acres, primarily in Williams and Divide counties, from Samson Resources. The deal expands Continental's dominant Bakken position to more than 1.1 million acres!

The deal includes 6,500 boe/d of production (82% oil) and was announced in conjunction with the sale of assets in the company's Eastern Region. The sale included 1,100 boe/d of production and raised $125 million.

“Continental believes the entire acquisition area.....has potential for deeper Three Forks development, based on three strategically placed cores taken in 2011. ”

The Bakken acquisition includes over 45,000 net acres where Samson and Continental were already partners. CLR's interest in the assets increased to 71% from 46%. Almost 35,000 net acres are already held by production from existing wells. Continental has a lower working interest (34%) in the rest of the acreage acquired, but will operate the bulk of the wells in the area. Of the remaining ~74,000 acres, almost 30,o00 is held by production from existing wells.

Size Adds Value in the Bakken

It is becoming more apparent that Continental believes economy of scale is going to add value to their bottom line. Bigger operators have more negotiating power in everything in the supply chain all the way to the midstream and downstream markets. Plans to expand ECO-Pad drilling across the basin also adds motive to consolidate fragmented interest across the basin. If invested all the capital, research and technical expertise in drilling multiple wells on location at one time, you'd want to benefit from operational success as much as possible. There's no sense in doing the dirty work for passive partners when they are willing sellers.

"This is a classic bolt-on acquisition, from a number of perspectives - strategic, tactical and financial," said Rick Bott, President and Chief Operating Officer. "It fits nicely into our deeper bench Three Forks de-risking plan, and we expect it to add immediate value. Within the next 30 days we plan to spud the first of 10 wells in the northern region, targeting the deeper benches to confirm commercial production and appraise our down-spacing concept, so we can quickly leverage operational efficiencies with pad drilling."

Read the full press release at contres.com