Emerald Oil Sheds 26,000 Acres To Bear Down On Bakken Production

Purchased 26,580 net acres of non-operated Williston acreage with current daily production of 850 BOE in two separate transactions.

Denver-based Emerald Oil Inc. (NYSE: EOX) has parted with most of its non-operated Williston Basin acreage in two deals totaling $113 million.

Emerald gave up 26,580 net acres to “industry partners” that produce 850 barrels of oil equivalent per day (BOE/d). No cash income tax obligations are expected from the transaction.

The sale pushes Emerald forward as a Bakken pure-play operator. Since a strong showing in the fourth quarter of 2012, Emerald has been converting its business model to an operator of Bakken wells and away from a non-operator.

The $113 million in proceeds from the closed deal gives Emerald $120 million cash in hand and an undrawn $75 million credit facility, said Curtis Trimble, managing director, senior E&P analyst for Global Hunter Securities.

Emerald now has a net acreage profile consisting of 30,745 operated and 2,548 non-operated acres, Trimble said.

“Only about 16,000 net acres of the 26,580 net acres divested. Those acres in Williams, Richland and McKenzie counties likely offered much value for EOX.”

The deal translates to $4,251 per acre or $132,942 per flowing barrel of oil equivalent per day (BOE/d).

In July, Emerald completed its fifth and sixth operated Bakken wells, the Talon 1-9-4H and the Slugger 1-16-21H. The wells were drilled from a single pad and each was completed with 34 frac stages.

The Talon's initial peak 24-hour production rate was 1,311 BOE. During its first 30 days of production, it produced 24,730 BOE, an average of 818 BOE/d.

Slugger had an initial peak 24-hour rate of 1,342 BOE and produced 24,433 BOE in its first 30 days, an average of 782 BOE/d.

The Hot Rod well currently is being fraced, to be followed by the Excalibur well.