Magnum Hunter To Expand Williston Presence By 150,000 Gross Acres
To purchase 149,700 gross acres of land primarily in Divide County, ND, gaining 1,295 BOE/d, 8.6 MMBOE proved.
Bakken Hunter LLC, a subsidiary of Magnum Hunter Resources Corp., Houston, (NYSE: MHR) plans to acquire certain North Dakota Williston Basin oil and gas properties from an affiliate of Baytex Energy Corp., Calgary, (NYSE: BTE) for $311 million in cash.
The deal values production at $327,000 per flowing barrel equivalent, proved reserves at $39.46 per barrel equivalent and proved and probable reserves at $28.97 per barrel equivalent, according to Baytex.
The assets include 149,700 gross (50,400 net) acres of land primarily in Divide County (24% developed). Samson Resources Co. is the operator of the properties, and pursuant to the joint operating agreement with Baytex, has the option under an existing area of mutual interest provision, to participate in the acquisition.
Pro forma and assuming Samson does not participate, Magnum Hunter would have a total Williston Basin position of more than 125,000 net acres. The sale represents 45% of Baytex’s North Dakota net acreage and approximately 40% of its current U.S. production.
Current net production capacity is 1,295 barrels of oil per day, which includes an estimated 350 barrels per day that is behind-pipe or waiting to be completed from wells recently drilled on the leasehold acreage. Proved reserves are approximately 8.6 million barrels equivalent (93% oil).
As of Dec. 31, 2011, Baytex estimates the assets to have 44.8 million barrels equivalent of "best estimate" contingent resource.
Glenn Dawson, president of Magnum Hunter subsidiary Williston Hunter Inc., says, “This strategic ‘bolt-on’ acquisition in North Dakota increases our technically focused acreage position to a 125,000 net mineral acreage block located in the Williston Basin. We will be transitioning from a previously minor working interest position into a significant growth platform targeting the prolific Sanish-Three Forks Reservoir and emerging middle Bakken trends in this region. Increased capital allocation combined with advancing drilling and completion technology will propel oil production growth for the remainder of 2012 and many years to come for our division.”
Magnum Hunter has received commitment letters from multiple lenders for a new $450-million senior secured second lien term loan facility to fund the acquisition, pay off an existing $100-million term loan facility, and to fund anticipated increased capex.
Following the deal, Magnum Hunter anticipates raising its upstream capital budget program from $150 million to approximately $225 million. The company intends to increase capex by approximately $50 million in the Williston Basin region alone, to account for the additional capex.
The deal is expected to close by May 22, with an effective date of March 1.