Kodiak Oil & Gas to buy Williston Basin acreage for $590 mn
16 Nov 2011
Independent oil and gas exploration and production company Kodiak Oil & Gas Corp yesterday agreed to buy additional properties in the Williston Basin in North Dakota for $590 million in cash and stock.
Denver-based Kodiak is buying 50,000 net leasehold acres in Williams and McKenzie Counties in North Dakota from an unnamed private oil and gas company and its financial partners for $540 million in cash and $50 million in common shares of Kodiak. Kodiak will also assume the seller's contract for a drilling rig.
Upon completion of the transaction, Kodiak would acquire two blocks of contiguous acreage, of which the southernmost lands, approximating 30,000 net acres, are adjacent to its core Koala Project area. The remaining leasehold is located in northern Williams County near the Nesson Anticline in an area actively being developed.
Net oil and gas production included in the pending acquisition is currently approximately 3,500 barrels of oil equivalent per day (BOE/d).
Also included in the acquisition are 19.7 million barrels of oil equivalent in proved reserves, 81 per cent of which are crude oil and 28 per cent of which are categorised as proven developed.
The transaction will expand Kodiak's total acreage position in the Williston Basin to approximately 155,000 net acres.
The company projects an average per-well estimated ultimate recovery of 750,000 to 900,000 BOE from the Bakken Formation. Internal evaluation of the northern acreage block yields per-well estimated ultimate recoveries of 350,000 to 450,000 BOE.
Included in the acquisition are certain surface equipment and gas pipeline connection facilities that tie into a regional third-party natural gas gathering system. The southernmost operated lands are proximate to a crude oil railway terminal and interstate pipeline interconnect that is expected to be fully in-service during 2012.
Kodiak also forecast production of 22,000-24,000 BOE/d for all of 2012 and expects to exit next year with an output of about 30,000 BOE/d.
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