Monday, November 26, 2012

Another Bakken Deal: Magnum Hunter and Samson Resources

Updates

November 27, 2012: $1,500/acre bonus seemed a bit low compared to some of the numbers we've seen in the Bakken, so let's look at what state auctions have brought in Divide County:
  • November, 2012: no Divide County acreage.
  • August, 2012: $1,371.41/acre bonus in Divide.
  • May, 2012: $1,534.06/acre bonus in Divide.
  • February, 2012: $1,760.67/acre bonus in Divide.
  • November, 2011: $150.48/acre bonus in Divide (no typo).
  • August, 2011: $1,439.73/acre bonus in Divide.
  • May, 2011: $1,050.02/acre bonus in Divide.
  • February, 2011: $755.15/acre bonus in Divide.
  • November, 2010: $948.12/acre bonus in Divide.
  • November, 2009: $440.87/acre bonus in Divide.
  • November, 2008: $582.63/acre bonus in Divide.
  • November, 2007: no acreage auctioned.
  • November, 2006: $82.10/acre bonus in Divide.
It looks like, based on those numbers, $1,500 was a fair price. In a large tract of land, some of the acres will be better than others. The $1,500/acre was at the upper end even in 2012. Compared to what they may have originally paid for the acreage ($90 back in 2006?), $1,500/acre is a pretty good return.


Original Post

This link will take you to a PDF.

A huge "thank you" to "anon 1" for sending me this link.
Magnum Hunter Resources, through its subsidiary, Bakken Hunter, LLC, will purchase 20,000 net Williston Basin acres in Divide County, North Dakota, from Samson Resources, for $30 million in cash.

In addition to the acreage, Magnum Hunter will also acquire approximately 310,000 boe of proved developed producing reserves and approximately 192 net boepd.  
This represents the second Samson Resources sale in the last couple of weeks. The other one involved CLR.

Back-of-the-envelope: $30 million/20,000 --> $1,500/acre. Is the math correct? There is already production in some of those areas, as noted.

This has been typed quickly, uploaded quickly; there may be errors. I will go back and edit, as necessary.
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2 comments:

  1. AnonymousNovember 27, 2012 at 12:31 PM

    $1500 per acre sounds cheep. Was paid more then that on a top lease in Divide CO.

    ReplyDelete
    Replies
    1. Bruce OksolNovember 27, 2012 at 1:14 PM

      That was my thought. Two considerations: a) larger tract averages out (some great locations; some poor locations; may have included acres that will "never" be drilled; b) the entire area might not be as good as one's specific area.

      And with every well drilled, operators have a better idea of the potential of a specific area.

      But I agree: $1,500 seems cheap. But the "real deal" in business is one's return: look at how much they made had they bought the acreage back in 2006. And it turns out $1,500 is about what Divide acreage (in general) is going for right now.

      But let's look at the recent state auctions:

      November, 2012: no Divide County acreage.
      August, 2012: $1,371.41/acre bonus in Divide.
      May, 2012: $1,534.06/acre bonus in Divide.
      February, 2012: $1,760.67/acre bonus in Divide.
      November, 2011: $150.48/acre bonus in Divide.
      August, 2011: $1,439.73/acre bonus in Divide.
      May, 2011: $1,050.02/acre bonus in Divide.
      February, 2011: $755.15/acre bonus in Divide.
      November, 2010: $948.12/acre bonus in Divide.
      November, 2009: $440.87/acre bonus in Divide.
      November, 2008: $582.63/acre bonus in Divide.
      November, 2007: no acreage auctioned.
      November, 2006: $82.10/acre bonus in Divide.

      Delete

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