Rachael Seeley, Editor
Newfield Exploration Co. has agreed to sell its Granite Wash assets to Templar Energy LLC for $588 million.
Templar is set to acquire 42,000 net acres in western Oklahoma and the Texas Panhandle. Net production is nearly 65 MMcfd of gas equivalent (MMcfed), comprising 60% gas. Proved reserves were 38 million boe at yearend 2013.
Lee Boothby, chief executive officer of Newfield, said the company has not drilled any Granite Wash wells in the past 3 years, and the sale is the culmination of a 3 or 4-year effort.
"I'll miss the Granite Wash, I really will, but I think we got a really, really attractive price," Boothby told analysts during a presentation of second-quarter results.
Newfield, based in The Woodlands, Tex., will use the proceeds to reduce long-term debt. Larry Massaro, executive vice-president and chief financial officer, said the sale demonstrates the company's willingness to "monetize nonstrategic assets, high-grade our portfolio, accelerate our domestic growth programs, and strengthen our balance sheet."
Templaris an exploration and production company based in Oklahoma City that invests primarily in mature, liquids-rich producing basins in the US Midcontinent. The company is backed by First Reserve Corp., a private equity firm.
The Granite Wash sale is expected to close in the third quarter of 2014 and carry an effective date of July 1.
Focus on liquids
Newfield began turning its focus to US onshore areas with a higher proportion of oil and NGL in 2009. The strategic transition included the divestiture of offshore and international assets. Core operating areas now include the Williston basin in North Dakota, the Eagle Ford shale in South Texas, and the Uinta basin in Utah.
Newfield reported company-wide production growth exceeded expectations in the second quarter. Net production averaged 134,000 boe/d, encompassing 55% liquids, and surpassing the midpoint of guidance by 11,000 boe/d.
Anadarko basin focus
So far this year, Newfield has increased its position in the Anadarko basin by 25,000 net acres to more than 250,000 net acres. The move reflects increased confidence in the potential of the Scoop and Stack areas targeting the Woodford and Meramac shales.
Newfield this year expects to spend $700 million to fund an eight-rig program in the Anadarko basin.
In July, the company announced plans to increase its annual capital spending budget by $100 million to $1.7 billion, reflecting the cost of the Anadarko basin acquisitions and improved drilling performance.
The Anadarko basin is the largest producing area in Newfield's portfolio. In May, Boothby told the UBS Global Oil & Gas Conference that production there is expected to double in 2014.
