US-based BreitBurn Energy Partners has signed an agreement with Whiting Oil and Gas to acquire their interests in the Postle and North East Hardesty oil fields in Oklahoma, for approximately $860m.
BreitBurn Energy will also acquire associated midstream assets as part of the deal. It has deposited around $86m with Whiting to execute the agreement.
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The company will also acquire interests in some of the acquired assets from other sellers for an additional $30.2m.
As of April, the acquired assets have produced around 7,400 barrels of oil equivalent (BOE), 87% oil and 11% natural gas liquids (NGLs). The estimated reserve life index of the acquired assets is around 13 years, based on estimated proved reserves of approximately 35 million BOE.
The acquired midstream assets will allow the integrated management of carbon dioxide compression, delivery and recycling. It also allows for oil exported through a wholly-owned pipeline.
BreitBurn Energy Partners CEO Hal Washburn said that the acquisition is expected to generate a significant distributable cash flow per unit and create long-term value for unit holders.
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By GlobalData"With current production from these properties comprised of 98% liquids, we expect our total net liquids production to increase by over 100% from the fourth quarter of 2012 to the fourth quarter of 2013 and exit 2013 with liquids comprising approximately 63% of our total net production," he said.
"The acquisition is complementary to our Permian Basin operations, and we expect that it will strengthen our technical and exploitation capabilities and broaden our intellectual capital with tertiary flood expertise that can potentially be applied to other BreitBurn properties."
The acquisition, which is expected to be completed in July, is subject to customary closing conditions and purchase price adjustments.
BreitBurn Energy has producing and non-producing crude oil and natural gas assets in Michigan, Wyoming, California, Texas, Florida, Indiana and Kentucky.
Image: The acquired assets have produced about 7,400 BOE per day by April 2013. Photo: courtesy of ShavPS.
