Kodiak Oil & Gas Corp. KOG, an
oil and gas exploration and production company with primary assets in the
Williston Basin, today announced that it has entered into a definitive
purchase and sale agreement with Liberty Resources ("Liberty"), a Denver-based
private oil and gas company, to acquire additional core Bakken and Three Forks
producing properties and undeveloped leasehold in the Williston Basin of North
Dakota.
The purchase price for the asset package is $660 million in cash. The purchase
price is subject to adjustment including, but not limited to, adjustments for
certain title and environmental defects, if any, as well as customary
adjustments to reflect the operation of the properties following the effective
date and prior to the closing. Net oil and gas production included in the
pending acquisition is currently approximately 5,700 barrels of oil equivalent
per day (BOE/d), which was the average net production for May 2013.
Production is expected to increase before closing as completion operations are
currently underway.
Upon completion of the transaction, Kodiak would acquire approximately 42,000
net acres located in McKenzie and southern Williams Counties, N.D., bringing
the Company's pro forma total lease holdings in the Williston Basin to
approximately 196,000 net acres. The acquired leasehold includes 35
controlled drilling spacing units, based upon 1,280-acre units, and is 90%
held by production. The southern Williams County lands, approximating 14,000
net acres, are adjacent to Kodiak's core Polar area. An additional 25,000 net
acres are located in McKenzie County to the west of the Company's Koala and
Smokey areas. Kodiak will also assume Liberty's contract for one drilling
rig, which has 14 months remaining on its term.
The acquisition is expected to close in July 2013 and is subject to the
completion of customary due diligence and closing conditions. The effective
date for the transaction is March 1, 2013, with any purchase price adjustments
to be calculated as of the closing date.
Financing of the Transaction
The Company expects to fund the acquisition through borrowings under its
revolving credit facility due April 2018, which carries a current borrowing
base of $650 million prior to any adjustments for the proposed transaction.
Kodiak is working with its banking syndicate to complete a redetermination
reflecting its year-to-date completion activities and pro forma for this
proposed transaction. The combined impact of Kodiak's recent completions and
the proposed transaction is expected to result in a significant increase in
the borrowing base. The Company will also evaluate all available financing
alternatives.
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