Bakken Oil & Gas Assets Change Hands (BKH, QEP)
Black Hills Corp. (NYSE: BKH) has sold about 85% of the company's assets in the Bakken and Three Forks shale plays in the Williston basin for approximately $243 million in cash. The effective date of the sale was July 1st and the deal is expected to close by September 30th.
The acquirer is a subsidiary of QEP Resources Inc. (NYSE: QEP), which also announced more asset acquisitions yesterday:
[QEP has entered into] two definitive agreements with multiple sellers to acquire significant crude oil development properties in the Williston Basin for an aggregate purchase price of approximately $1.38 billion.
The Black Hills assets were jointly owned with Helis Oil & Gas, among others, and included 28,000 net lease acres. QEP did not provide any details on how it spent the remaining $1.143 billion, but the company did say that it acquired 118,000 net acres in the Williston basin, including the Black Hills acreage. Other items of note from QEP's announcement:
Aggregate current net production approximately 10,500 barrels of oil equivalent per day (Boepd).
Aggregate net proved and probable reserves of approximately 125 million barrels of oil equivalent (MMBoe), comprised of approximately 81% crude oil, 9% NGL and 10% natural gas.
Above Williston Basin-average well estimated ultimate recoveries or EURs for both Bakken and Three Forks formations in the contiguous, operated acreage block.
QEP estimates future net development capital for all acquired assets to be approximately $1.59 billion.
Black Hills affirmed its current guidance for full-year EPS of $1.90-$2.10 and estimated that it would report a one-time, pre-tax gain of $20-$40 million and will apply the rest of the proceeds to a reduction to its full-cost pool of assets. Black Hills expects to reduce its full-cost pool for the rest of this year by $1.30-$1.45 per thousand cubic feet.
QEP raised its adjusted EBITDA guidance for the year from $1.35-$1.4 billion to $1.4-$1.45 billion and forecast production to rise from 305-310 billion cubic feet equivalent of natural gas to a new range of 310-315 billion cubic feet equivalent. The company also raised its capex estimate from $1.45-$1.5 billion to $1.5-$1.55 billion.
Investors like both ends of this deal. Black Hills stock is up about 7.5% at $33.32 in a 52-week range of $28.63-$35.82. Shares of QEP are also up - by 5% - at $28.55 in a 52-week range of $23.56-$38.44.
Paul Ausick
Filed under: 24/7 Wall St. Wire, Commodities, Oil & Gas Tagged: BKH, QEP
