I plan on posting this twice.
I will post it now; it won't be quite ready for prime time, but I want to get it out there for a number of reasons.
The question is this: what did XOM pay for a DNR Bakken acre?
A reader who follows the North Dakota oil industry very, very closely comes up with these figures regarding the XOM-DNR deal.
1. He estimates that DNR should be able to clear $15/bbl from oil recovered in the Texas and Wyoming fields (Webster field and Hertzog field). This takes into account the cost of drilling, completing, EOR, pipelines, transportation, etc.
2. Webster field has 60 - 75 million bbls of recoverable oil.
3. Hertzog field has 20 - 30 million bbls of recoverable oil.
4. For argument's sake, let's say a nice round 100 million bbls of recoverable oil.
5. At $15/bbl, $1.5 billion.
6. $1.5 billion in oil from the EOR fields and $1.6 billion in cash --> $3.1 billion
7. $3 billion / 196,000 acres --> $15,000/acre.
Bottom line: using assumptions in lines 1 - 3, one can come up with a figure of about $15,000/Bakken acre that XOM paid for DNR Bakken acreage.
So, we will see what the analysts come up with. In addition, it will be interesting to see what readers come up with.
The $15,000/Bakken acre seems about right.
Before the QEP-Helis deal, the record amount paid for a Bakken acre was $12,000 in a state lease auction (by my reckoning, it was a record in the public domain; there may have been other deals that I missed that were more, and I don't know about private deals).
DNR has some great acreage in the Williston Basin, including much in the heart of the Bakken, but also some acreage that probably will not amount to much.
Anyway, I'm curious if readers have an estimate on what XOM might have paid for these DNR Bakken acres.
