The largest asset of the three is Magnum Hunter's interest in the properties in the Western part of Divide County operated by Baytex Energy. As a reminder, Baytex had an open data room and sold its assets to SM Energy. SM agreed to pay $330 million for Baytex's approximately 61,000 net acres and 3,200 boe/d of net production (91% oil, 1,500 Btu rich gas).
Magnum Hunter is also attempting to sell some other peripheral properties in North Dakota that likely include non-operated interests in properties operated by Crescent Point and SM Energy. In my understanding, the Divide County assets expected to be divested by year-end are producing ~1,100 boe/d net. Based on this metric and using the valuation in Baytex's sale to SM Energy, the $100 million divestiture proceeds should be achievable.
Following the anticipated divestitures, Magnum Hunter will still have a significant, albeit mostly non-operated, position in the Bakken. Magnum Hunter currently receives net production of almost 3,000 boe/d from its interests in properties operated by Samson (private) and another ~200 boe/d from properties operated by Continental Resources.
Magnum Hunter-operated assets (Williston Hunter) are relatively small and currently produce ~350-400 boe/d.
Magnum Hunter values its interest in Samson-operated properties in the $300-$400 million range. Based on the slide at the Seeking Alpha link, the assets are firmly designated for sale, but Magnum Hunter does not appear to be far along in the process.It's hard to sort out the value per acre, but one method would suggest about $5,000/acre in Divide County, some of it already producing.
The divestitures are needed by Magnum Hunter to raise cash to expedite development of its natural gas assets in the Marcellus and Utica in the east:
The spectacular success of Magnum Hunter's dry gas Utica delineation well in West Virginia brings a new meaning to the company's decision to narrow its strategic focus to the Appalachia region. With ~80,000 net acres prospective for the Marcellus and ~118,000 net acres prospective for the Utica/Point Pleasant, Magnum Hunter has critical mass and sufficient asset platform to build upon.
IT's a nice find for MHR. Not enough to move the futures markets though. (including looking out a bit). I guess in the end, even if the Utica is awesome, it will still be a little brother to the Marcellus.
ReplyDeleteYes, a lot of story lines in that one story.
DeleteGreetings, all. I would take a qualified exception to the above comment about the Utica being a little brother to the Mighty Marcellus. While there should be little doubt that the Marcellus will be a multi-decade long stupendous gas play, the two recently reported results from the Utica - Shell with a 26mmcf IP up in Tioga county, Pa, along with Magnum Hunters incredible 46mmf IP in Tyler county, WV should give pause to one and all about the future potential here.
DeleteThe distance between these two counties - as the crow flies - is 400 miles. If one considers these two wells as sort of a huge scale delineation model, the amount of hydrocarbons BENEATH the Marcellus may simply be almost unfathomable.
There are umpteen caveats in what I just described, but the minimal drilling up till now in the dry gas area of the Utica may well lull many to its ultimate potential.
Thank you, I appreciate that. I know almost nothing about the Marcellus and the Utica (except that they are big); I am learning as I go along.
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