Oklahoma City-based Continental Resources, Inc. announced a new multimillion dollar strategic alliance on Monday with Canada-based Franco-Nevada Corporation. Franco-Nevada agreed to invest $220 million for an interest in the newly-created minerals subsidiary. Both companies committed to spend up to a combined $125 million annually for the next three years to acquire minerals in Oklahoma’s prolific SCOOP and STACK plays, according to a company press release.
Continental Resources agreed to fund 20% of future mineral acquisitions while being entitled to 25%-50% of total revenues generated by the minerals subsidiary based on targeted performance.
“We could not be more pleased to team up with a leading royalty corporation in Franco-Nevada, who has a vast understanding of the value of mineral ownership as evidenced by their long track-record of acquiring assets globally,” said Harold Hamm, Continental Resources’ Chairman and Chief Executive Officer. “We are pleased to announce yet another growth vehicle to Continental within our core business, complementing our existing assets and capturing incremental value for Continental shareholders while also applying proceeds for further debt reduction.”
“Collaborating with Continental to purchase minerals is a new business development opportunity for Franco-Nevada,” said David Harquail, Franco-Nevada’s Chief Executive Officer. “We are pleased to be able to work with this best-in-class operator to further strengthen Franco-Nevada’s overall portfolio.”
The mineral rights represent a perpetual ownership interest in land which provide an entitlement for royalties from oil & gas production.