Oklahoma-based Continental Resources, Inc. (CLR) has inked a pact worth $650 million to acquire various producing and undeveloped Bakken assets.
The assets consist of a net acreage of around 120,000 – leases mainly in the Divide and Williams counties, North Dakota, as well as a yield of around 6,500 barrels of oil equivalent per day (Boe/d).
As of September 30, 2012, Continental remains the leading leaseholder in the Bakken, with a net acreage of about 984,000. With the completion of its current purchase in the Bakken, the total holding of the company will increase to 1.1 million net acres.
Further, Continental has also announced a sale for its producing crude oil and natural gas assets as well as supporting assets in its East Region for a total value of $125 million.
The assets in the East Region are mainly located east of the Mississippi River, together with the Illinois Basin and the state of Michigan, among other areas. For the quarter ended September 30, 2012, output from the properties – forming a part of the sale agreement – averaged approximately 1,100 Boe/d.
Both these deals are likely to be closed before December 31, 2012. However, these are subject to customary closing conditions and adjustments.
Continental’s ongoing negotiations are in line with its strategy that sees the company dispensing with its mature, non-core upstream assets to create a portfolio with stronger growth potential in the Bakken. The company intends to use the proceeds to purchase strategic and core assets in the Bakken.
Continental believes that if the Bakken acreage acquisition is completed on time, the additional 2013 drilling expenses will be largely mitigated by the incremental cash flow from the assets.
Continental holds a Zacks #2 Rank, which is equivalent to a Buy rating for a period of one to three months. The company’s peer includes EOG Resources Inc. (EOG).
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