Wednesday, November 7, 2012

HUGE! CLR Goes Over 1 Million Net Acres in the Bakken

Updates

Later, 11:20 pm: see comment regarding Newfield. If the seller is Newfield, one would expect to see a press release from Newfield. One would think it would be material, but Newfield is a $3.5 billion company and maybe an announcement selling 120,000 acres can be "delayed." I honestly don't know.

But the comment has piqued a bit of interest. First, it's hard to put together 120,000 acres from a multitude of sellers.

OXY USA has 300,000 acres but I associate OXY USA farther south in McKenzie and Dunn counties.

But Newfield has 100,000 acres, but quickly going through my database most of their permits have been in McKenzie county, so we are back to square one. I can find several publicly traded companies in Williams and/or Divide but not both (excluding obvious ones like CLR). For example, Samson Resources has a lot of permits in Divide, but not Williams. Zavanna and Zenergy have a lot of permits in Williams but not divide. Petro-Hunt, LLC, has been very, very active lately, and not publicly traded would not have to announce the transaction. But Petro-Hunt's permits are in Williams County; I don't see any permits in Petro-Hunt permits in Divide County.

So, all idle chatter. But to suggest this for the moment: Petro-Hunt has been very, very busy with permitting lately; a $650 million cash infusion for acres not in their core area, and not having to announce, it's very possibly Petro-Hunt. It caught me by surprise when Halcon (HK) bought 81,000 acres from Petro-Hunt.

Original Post
Link to the press release here.
Continental Resources, Inc. (CLR) announced today it has entered into an agreement to acquire certain Bakken producing and undeveloped properties for $650 million. The property includes leasehold of approximately 120,000 net acres, primarily in Divide and Williams counties, North Dakota, and production of approximately 6,500 barrels of oil equivalent per day (boepd).

Continental is currently the largest leaseholder in the Bakken, with 984,040 net acres as of September 30, 2012. If completed, the proposed acquisition will increase this total to 1.1 million net acres.
In addition, Continental announced it has entered into an agreement to sell its producing crude oil and natural gas properties and supporting assets in its East Region for cash proceeds of $125 million. The East Region primarily includes properties east of the Mississippi River, including the Illinois Basin and the state of Michigan, among other areas. Production from the properties included in the sale agreement averaged approximately 1,100 boepd for the three month period ended September 30, 2012.
More to follow.

Back of the envelope: $650 million/120,000 --> $5,000/acre. Not bad. Will this close before the fiscal cliff taxes, January 1, 2012?

12 comments:

  1. IL Basin has had a hot leasing play for about a year.

    CLR seems to have a bargain.

    ---------
    Gulfport 3Q call and PDF have interesting words and images about the Utica.

    Anon 1

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    1. The 120,000 acres (some producing acreage) for $650 million ($5,000/acre) seems like an incredible deal. I don't know anything about the IL Basin to comment.

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  2. I hope these are Newfield's acres in northwest Williams County. Newfield isn't doing much with them!!!!

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    1. See discussion above in response to your suggestion. Thank you. If it's Newfield, I owe you a steak dinner if our geographical paths ever cross.

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  3. We live close to Grenora, ND and they serve a mighty good steak at the Centennial Bar!!!HA

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    1. You are right about Samson... They are scattered across northern Divide and Burke Counties. As you go south from there, two names come to mind. Baytex, and Crescent Point Energy. (both are Canadian companies) Then as you get into northern Williams county, you have Hess and I believe also some Hunt wells. Dave

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    2. I considered Baytex and Crescent Point, but I ruled them out (no good reason) but it's possible; retrench to their Canadian roots.

      But if any company needs a cash infusion with all their new permit activity it would be Petro-Hunt.

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  4. Continenal already operates on some of the acreage they purchased - does that narrow it down?

    Baytex sold their non-op already. Slawson? Northern Oil and Gas?

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    1. Slawson as a non-public company, possibly.

      NOG: they are quick with their press releases, and publicly traded. I think we would have heard had it been NOG.

      Slawson has not been particularly active in the Bakken, recently, so they don't need cash for drilling like Petro-Hunt would. But, ahead of increased taxes next year, yes, Slawson could have sold. It just doesn't "feel" like Slawson, but I have no idea.

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  5. I heard Petro-Hunt had over 600,000 acres before the HK/G3 transaction. Interesting to see how this private monster will play the bakken and how they keep their cards close to their chest.

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    1. That's an extremely helpful data point.

      Did you see what a large institutional buyer paid for 544 net acres in the Eagle Ford (mostly natural gas in this particular deal)? $20 million. The math will give one an idea what 600,000 acres in the Bakken could be worth (mostly oil).

      Petro-Hunt has been very, very active in permitting the last six months; they, of all Bakken operators, might need $650 million to do all the necessary drilling (see original post above).

      Thank you for commenting. Again, as noted, that's an important data point.

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