SandRidge Energy, Inc. has announced that it has secured a material, derisked Niobrara Shale position in the North Park Basin, Jackson County, Colorado, by acquiring the assets of EE3, LLC (EE3) in a privately negotiated transaction for $190 million in cash, pending standard due diligence and post-closing adjustments. The transaction is expected to close in the fourth quarter of 2015.
The Niobrara Shale is characterized by numerous stacked pay reservoirs, proven production history, long-lived reserves and repeatable drilling results. The acquired acreage is largely concentrated in rural north central Colorado and ideal for pad drilling and efficient infrastructure installation.
In a statement published on the company’s website, SandRidge said that the large, concentrated acreage position in Niobrara Shale play has similar geologic characteristics to the DJ Basin Niobrara with five stacked benches at depths of 5,500 to 9,000 feet, reservoir thickness over 450 feet, oil in place greater than 55 MMBo per section and overpressured reservoir above 0.55 psi per foot. It also offers a significant upside from additional horizons; Niobrara Shale C Bench with proven production on this acreage with EUR per well of 311 MBoe generating 32% IRRs at recent strip pricing with well costs targeted below $4 million, and estimated 27 MMBoe proved reserves (82% oil) at projected year end 2015 SEC prices.
The company has planned an initial one rig development program beginning in January 2016, increasing to two rigs in mid-2016, with 13 drilling permits already approved.
SandRidge President and CEO, James Bennett, commented, “Our rightsized and derisked acquisition of assets in the North Park Basin deliberately matches our expertise with a clear line of sight to over 1,300 high return drilling locations. Expanding into a proven high quality repeatable oil play leverages our core competencies in medium depth horizontal drilling, unconventional development, infrastructure, and cost reduction. Significant upsides include additional zones beyond the proven Niobrara D bench, deploying our Mid-Continent multilateral, extended lateral designs and improved completion designs. We will be mobilizing to spud our first well in January.”
Mr. Bennett further said, “We anticipate improved corporate capital efficiency by concurrently developing our strong Mid-Continent and newly acquired Niobrara resource base. This valuable acquisition, which long term has the potential to add half or more to our current reserves base, represents judicious use of our liquidity.”
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