Atinum Partners Co. Ltd., Seoul, will acquire a 13.2% nonoperated working interest in 860,000 acres held by SandRidge Energy Inc., Oklahoma City, in the Mississippian horizontal oil play in northern Oklahoma and southern Kansas for $500 million.
Atinum will pay $250 million cash at closing and the rest as a drilling carry obligation to pay 13.2% of SandRidge’s share of drilling and completion costs up to $250 million, expected to occur over 3 years.
SandRidge said it is the Midcontinent Mississippian play’s most active operator with 16 rigs operating and 111 horizontal wells drilled. The company expects to average 24 rigs in the play in 2012.
SandRidge also identified and established an acreage position in a new area that is similar in size, characteristics, and cost to the now-proven Mississippian play. It didn’t identify the area geographically.
The company hiked its 2011 capital budget to $1.8 billion, up $500 million, and expects to spend a similar sum in 2012 as it seeks to establish a self-funding capital program by 2014. The new budget reflects acreage acquisitions and drilling in the Midcontinent and Permian basins, where SandRidge operated a combined 32 rigs in early August.
SandRidge has drilled 111 of industry’s 250 horizontal wells in the Mississippian oil play, a shallow carbonate hydrocarbon system that spans 150 miles. SandRidge grew its production to 8,400 b/d of oil equivalent from 770 boe/d in the 2010 second quarter.
The company plans to have drilled 172 horizontal wells in 2011 and has identified more than 4,000 drilling locations on the nearly 900,000 net acres it has under lease.
SandRidge has established a 200,000 net acre position in another Mississippian play that is a shallow hydrocarbon system in a thick, porous, carbonate section. The Mississippian is 250-700 ft thick “with enhanced porosity development just beneath the pre-Pennsylvanian unconformity. The geological setting is an extensive regional stratigraphic trap within a hydrocarbon system that has a long history of Mississippian production from thousands of vertical wells.”
The joint venture with Atinum covers all of SandRidge’s original Mississippian play area other than wells and acreage in the associated spacing units spudded prior to the effective date and wells and acreage associated with SandRidge Mississippian Trust I. The deal is expected to close in the fourth quarter.