The Bakken shale holdings of Norway’s Equinor are being sold in a $900 million deal announced this week by the company.
The sale of the assets in North Dakota and Montana come after years of mulitibillion dollar losses for the company. The buyer is Grayson Mill Energy which is a firm backed by EnCap Investments, a private equity firm.
The sale involves all of Equinor’s operated and non-operated 242,000 net acres and its related midstream assets in the Bakken.
The announcement said entitlement production from the assets in the fourth quarter of 2020 was 48,000 barrels of oil equivalent a day. As part of the sale, Equinor Marketing and Trading will enter into a term purchase agreement for crude offtake with Grayson Mill Energy.
“Equinor is optimising its oil and gas portfolio to strengthen profitability and make it more robust for the future,” CEO Anders Opedal said in a statement.
As part of the agreed transaction, all Equinor field employees and a significant number of the support teams working on the Bakken assets will have the opportunity to transfer to Grayson Mill Energy.
The effective date of the transaction is 1 January 2021.
The Bakken apparently was no longer profitable for Equinor. Analysts pointed out that the region has a high per-barrel cost of production, something that investors don’t prefer. As Opedal indicated, it’s all about making money.
“By divesting our Bakken position we are realising proceeds that can be deployed towards more competitive assets in our portfolio, enabling us to deliver increased value creation for our shareholders.”
Despite high production costs, the Bakken remains a mainstay for Oklahoma City-based Continental Resources, one of the exploration companies that made its name in North Dakota.