DENVER, June 21, 2016 (GLOBE NEWSWIRE) -- QEP Resources, Inc. (NYSE:QEP) announced today that its wholly owned subsidiary, QEP Energy Company, has entered into a definitive agreement with certain individuals and entities to acquire oil and gas properties in the Permian Basin from the Initial Sellers and other associated individuals and entities for an aggregate purchase price of approximately $600 million, subject to customary purchase price adjustments. The Acquisition properties, which are located in Martin County, TX, will further broaden the Company’s exploration and production footprint in the core of the northern Midland Basin. The Acquisition advances QEP’s strategy of acquiring, developing and producing oil and gas from resource plays in its core operating areas and expanding into areas where it can capitalize on its operating and technical expertise.
The Agreement provides that the Initial Sellers have until July 13, 2016 (the “Election Deadline”), to obtain executed joinders to the Agreement from the Associated Owners. In addition to customary purchase price adjustments, the $600 million purchase price shall be reduced by the allocated value of any assets owned by Associated Owners that fail to execute a joinder of the Agreement (collectively, the “Non-Participating Associated Owners”) prior to the Election Deadline. The Agreement may be terminated by QEP, at its sole option, if the aggregate allocated value of all assets owned by Non-Participating Associated Owners exceeds 10% of the $600 million purchase price.
Acquisition Highlights:
- 10 miles east of existing QEP operations
- Approximately 9,400 net acres in Martin County, TX
- 98% of acreage is held by production to base of Wolfcamp Formation or deeper
- 96% average working interest subject to a 23% royalty burden
- Current net production of approximately 1,400 barrels of oil equivalent per day (Boed), of which approximately 83% is crude oil, from 96 vertical wells
- Potential for over 430 horizontal drilling locations over four horizons – Wolfcamp A, Wolfcamp B, Middle Spraberry and Spraberry Shale – with additional potential in deeper and shallower horizons
- Net proved reserves, based on internal estimates, of approximately 76 million barrels of oil equivalent (MMBoe)
- Total net recoverable resources, based on internal estimates, of approximately 275 MMBoe
“The Acquisition adds significant drilling inventory in the core of the northern Midland Basin and broadens our footprint in a world-class crude oil basin,” commented Chuck Stanley, Chairman, President and CEO of QEP. “We believe this Acquisition, combined with our existing crude oil assets, will enhance our crude oil production growth and improve our operating efficiency.”
The transaction is expected to close in September 2016, subject to customary closing conditions, with an effective date of April 1, 2016.
About QEP Resources
QEP Resources, Inc. (NYSE:QEP) is an independent natural gas and crude oil exploration and production company focused in two geographic regions: the Northern Region (primarily Wyoming, North Dakota and Utah) and the Southern Region (primarily Texas and Louisiana) of the United States.
