Flashback: this is a re-look at the announcement in which XTO bought Headington Oil back in 2008. I was interested in some Nesson Anticline information, and ran across this gem. I thought others might enjoy reading about it again.
XTO bought Headington Oil in 2008, and XOM bought XTO in 2010.
Data points:
- Conference call date announcing the deal, publication date: May 28, 2008
- Acquisition: XTO buys privately held Headington Oil for $1.85 billion in cash in XTO common share
- Proved reserves + production + 215,000 net undeveloped unacreage = value of acquisition
- Deal effective: May 1, 2008
- Proved reserves (est): 68 million boe
- Production costs: $3/boe (not a typo --> $3/boe)
- Production growth (est): 12 - 15% per year going forward
- 352,000 net acres; 215,000 undeveloped
- [Note: XOM acquired XTO; XOM has 410,000 net acres in the Bakken]
- XTO first bought in the Bakken back in 1987; a horizontal well --> a "500,000 boe type well"
- Acquisition should put XTO into top three producers in the basin
- Plans to add to this position
- XTO had been looking at the Bakken for past couple of years; Headington put together a ice position
- Most of acreage in Nesson Anticline
- Believed there was about 3 billion bbls of oil in place
- If only 10% recoverable, and get only half, looking at 150 million bbls in this acquisition; believes currently it is about 68 million bbls; thus, XTO sees a "double"
- Wells are "getting much better"
- There is a trend of drilling wells into the Sanish in Three Forks (the zone below the Bakken)
- This is one of the few acquisitions that XTO will get 12 - 15% annual growth with the third of the cash flow (based on current oil prices)
- Back to single laterals (problems with dual and multiple laterals)
- Single stage fracks (that has changed)
- Oil is light (43 gravity)
- Natural gas is rich (1,500 BTUs)
- EOG has been successful east of the Nesson Anticline
- XTO may be drilling 320-acre infills in Elm Coulee; belies down spacing will occur over time
- Expects technology to improve recoveries
- CLR was looking at CO2, small pilot, CO2 project in Elm Coulee
- Believes there may be some potential for some additional secondary, tertiary recovery
- We expect a lot of refracking (yes, that's how the publication spelled it)
- Will drill tighter spacing --> resulting in increased recovery (seen in other shales)
- CAPEX: $130 - $140 million/year (represents about one-third of the cash flow "on the strip"
- Hess has been active on the northern part of the anticline
- CLR: active on the northern and southern end of the anticline
- BR, MRO: active on the southern end
- Murex: "another little independent that's been very successful drilling wells on the top of the anticline"
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