Petroleum and natural gas explorer and producer Continental Resources has signed a strategic deal with gold-focused royalties and streams company Franco-Nevada to jointly acquire mineral rights in the Scoop and Stack oil and gas plays in Oklahoma, US.
Under the terms of the transaction, Franco-Nevada will buy existing mineral rights owned by a newly formed Continental subsidiary for $220m.
The future mineral acquisitions will be made by the newly formed subsidiary within acreage operated by Continental.
The companies will together invest up to $125m over three years for the acquisition of additional mineral rights, with Continental expected to fund 20% of the costs and receive between 25% and 50% of total revenues generated by the subsidiary.
Franco-Nevada CEO David Harquail said: “For Franco-Nevada, collaborating on mineral rights with an operator is a new business development opportunity.
“It will allow for the ongoing growth of Franco-Nevada’s oil and gas interests through the acquisition of mineral rights at the grass-roots level.”
The firm noted that the Scoop and Stack areas will offer strong well results, excellent economics, and future upside via stacked hydrocarbon-bearing horizons.
The mineral rights acquisition will provide Franco-Nevada royalties from oil and gas production.
Continental Resources chairman and CEO Harold Hamm said: “We could not be more pleased to team up with a leading royalty corporation in Franco-Nevada, who has a vast understanding of the value of mineral ownership as evidenced by their long track-record of acquiring assets globally.”
According to Reuters, Continental will use the proceeds from the subsidiary to reduce its debt, which stands at $6.16bn.
