QEP to purchase Permian oil assets for $950 million

QEP Energy Co., a wholly owned subsidiary of QEP Resources Inc., has entered into a definitive agreement to acquire oil and gas assets in the Permian basin from EnerVest Ltd., Houston, for $950 million. The transaction is expected to close before Jan. 31, 2014.

Updated with new information on Dec. 10.

QEP Energy Co., a wholly owned subsidiary of QEP Resources Inc., has entered into a definitive agreement to acquire oil and gas assets in the Permian basin from EnerVest Ltd., Houston, for $950 million. The transaction is expected to close before Jan. 31, 2014.

The assets, which lie over 26,519 net acres in the Midland sub-basin, primarily in Martin and Andrews counties in West Texas, account for 6,700 boe/d in current net production, 68% of which is crude oil, and 47 million boe in net proved reserves. Estimated net recoverable resources total 300 million boe.

The assets contain nine potential horizontal development targets over a 3,000-ft vertical section. Overall the property could eclipse 200 vertical and 775 horizontal drilling locations.

QEP said acquisition will diversify its exploration and production footprint, and advance its objective to create long-term shareholder value through the continued emphasis on high-margin crude oil and natural gas liquids production.

“Our new ventures team has been actively focused on expanding our footprint in the world-class crude oil provinces of North America, first in the Williston basin and now in the Permian basin,” said Chuck Stanley, QEP’s chairman, president, and chief executive officer.

In August 2012, QEP signed definitive agreements totaling $1.38 billion to acquire Williston development properties from Helis Oil & Gas Co., Black Hills Corp. subsidiary Black Hills Exploration & Production Inc., and Unit Corp. subsidiary Unit Petroleum Co. (OGJ Online, Aug. 24, 2012).

“This acquisition allows us to leverage our competitive strength of drilling horizontal development wells in multipay, stacked reservoirs, and provides a 10-year inventory of crude oil drilling locations,” Stanley added.

QEP said it expects to sell various noncore exploration and production assets in the Midcontinent region in first-half 2014 to ensure the company will have adequate liquidity and maintain a strong balance sheet.

Earlier this month QEP said it would pursue a separation of its midstream business, QEP Field Services Co., including the company’s interest in QEP Midstream Partners LP (QEPMP), in part, to independently deploy resources and allocate capital according to the board’s strategic initiatives and growth strategies (OGJ Online, Dec. 3, 2013).

The company intends to focus its capital spending in the Williston and Permian basins, along with the liquids-rich gas Pinedale Anticline and Lower Mesaverde play in the Uinta basin.

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