QEP to buy Helis-Black Hills Williston basin properties

QEP Resources Inc., Denver, said its QEP Energy unit signed definitive agreements to acquire from multiple sellers Williston basin development properties for $1.38 billion.

The properties are in Williams and McKenzie counties, ND, 12 miles west of QEP’s existing core acreage in the Williston basin.

The transactions are to close by Sept. 27, effective as of July 1, 2012. The properties produce a combined 10,500 b/d of oil equivalent and have 125 million boe of net proved and probable reserves, 81% crude oil, 9% natural gas liquids, and 10% natural gas. The acquisitions also include 27,600 net acres of mostly fee simple mineral leases with 80% average net revenue interest.

QEP will operate 90% of the aggregate net acreage to be acquired. That acreage is presently operated by Helis Oil & Gas Co. LLC, New Orleans. The other sellers include Black Hills Exploration & Production Inc., a subsidiary of Black Hills Corp., Rapid City, SD, and the Unit Petroleum Co. subsidiary of Unit Corp.

The properties have 24 operated spacing units with 85% average gross working interest and 66% average net revenue interest and 27 nonoperated spacing units with 10% average gross working interest and 8% average NRI.

QEP sees above Williston basin-average well estimated ultimate recoveries for both Bakken and Three Forks formations in the contiguous, operated acreage block. For long-lateral wells drilled after January 1, 2010, Bakken EURs average 1.16 million boe and Three Forks EURs average 990,000 boe.

QEP said the Bakken and Three Forks formations are prospective across all of the acreage and will be developed by separate horizontal wells. The properties have 72 gross, 29 net developed locations and 301 gross, 146 net undeveloped locations.

Future net development capital is estimated at $1.59 billion, and QEP hiked its 2012 capital budget to $1.5-1.55 billion from $1.45-1.5 billion. The acquisition will increase QEP’s Williston basin net acreage to 118,000 acres.

Black Hills said it is selling 2.2 million bbl of oil and 3.4 bcf of gas proved reserves for $243 million. It said it will use the $230-240 million in net proceeds to reduce debt and that the sale will “enhance our ability to self-fund planned growth projects, such as the $237 million Cheyenne Prairie generating station, without issuing equity.”

Black Hills still has assets in the San Juan and Piceance basins that include Mancos shale gas potential.

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