Tulsa’s WPX Energy has sold some of its Bakken holdings in North Dakota in a $1.5 million deal with Northern Oil and Gas, Inc. of Minnesota.
The deal involved the sale of 320 acres of Williston Basin Properties and Closing is expected July 1, 2020. In making the announcement, Northern indicated that since signing, it has received 9 gross well proposals to fully develop the unit consisting of 2.1 net wells.
WPX Energy did not comment on the sale and the announcement was made by Northern Oil and Gas based in Minneapolis. But WPX Energy’s website shows it has 85,000 acres of holdings in the Bakken play. The site stated that WPX operations span 85,000 net acres on the Fort Berthold Indian Reservation. Convinced we’re in the sweet spot of the play, we put our efficiency model to work.
Northern expects approximately $12.5 million of development capital through 2020 and early 2021, with expected initial sales in the first quarter of 2021. The acquired assets are expected to produce 1,200 barrels of oil equivalent (Boe) per day and produce an estimated $11.3 million of unhedged cash flow from operations in 2021 at the current commodity pricing strip as of June 5, 2020.
Inclusive of the development capital and acquisition costs, Northern expects a payback period of under 1.5 years.
All acquisition and associated development capital has already been accounted for in Northern’s recent 2020 capital budget.
In addition, Northern entered into additional crude oil derivative swaption transactions to hedge a portion of the production associated with this and other transactions at an average of $45.48 per barrel for 2021 for 1,500 barrels per day. That average price is approximately $3.85 higher than the underlying strip price used to calculate the estimated cash flow stream described above.
“We have consistently believed this environment would create opportunities for our shareholders in 2020 and beyond, and budgeted for opportunities like this,” commented Northern’s Chief Operating Officer, Adam Dirlam. “This acquisition, while modest in size, is located in the heart of the core with one of the top operators in the Williston Basin and highlights Northern’s competitive advantage as an actively managed non-operator. We expect this deal to be materially accretive to cash flow in 2021, yet represents no additional capital spending to our stated 2020 budget.”
Northern Oil and Gas, Inc. is an exploration and production company with a core area of focus in the Williston Basin Bakken and Three Forks play in North Dakota and Montana.
Source: Business Wire
