XTO Energy to buy Bakken shale properties
XTO Energy agreed to acquire producing properties and undeveloped acreage in the Williston basin Bakken shale from privately held Dallas firm Headington Oil for $1.85 billion in a cash-stock deal.
By OGJ editors
HOUSTON, May 28 -- XTO Energy Inc. agreed to acquire producing properties and undeveloped acreage in the Williston basin Bakken shale from privately held Headington Oil Co. LP of Dallas for $1.85 billion in a cash-stock deal.
The purchase includes 352,000 net acres of Bakken shale leasehold in Montana and North Dakota. Headington is slated to receive $1.06 billion of cash and 11.7 million shares of XTO stock valued at $67.35/share. The acquisition is scheduled to close on or before July 15.
Properties being acquired are in the Bar Trend and Nesson Anticline of the Bakken shale. Currently, the primary producing field is Elm Coulee in Montana. Out of the 352,000 net acres that XTO plans to acquire, 215,000 acres are undeveloped.
Estimated proved reserves on the properties are 68 million boe, of which 60% is proved developed reserves, said XTO Chairman and Chief Executive Officer Bob R. Simpson. XTO has "aggressively pursued" shale basins since 2004, Simpson said. Upon closing, the acquisition will add about 10,000 boe/d to XTO's production base.
Production volumes are 88% oil, but the associated natural gas is btu-rich in composition, realizing a 30% premium to New York Mercantile Exchange pricing, XTO said.
XTO of Fort Worth plans horizontal drilling on what it describes as "the multizoned, overpressured, and complex basin."
The US Geological Survey recently estimated 4.3 billion bbl of undiscovered, technically recoverable oil in the Bakken shale. The USGS estimate was similar to estimates from Continental Resources Inc., Enid, Okla., (see map, OGJ, Apr. 24, 2008, p. 37). Continental Resources has 490,000 acres in the Bakken, of which 125,000 acres is in Montana and the rest is in North Dakota.
EOG Resources currently has 12,000 b/d of production from its 320,000 acres in the Bakken.