QEP Resources buying 9,400 acres from unnamed sellers
By Ernest Scheyder
HOUSTON, June 21 (Reuters) – U.S. oil producer QEP Resources Inc said on Tuesday it would spend $600 million to buy acreage in the Permian Basin of Texas, the latest in a recent string of sector acquisitions as crude prices stabilize near $50 per barrel.
The deal comes a day after Marathon Oil Corp said it would pay $888 million for Oklahoma acreage. Devon Energy Corp , Pioneer Natural Resources Co and others have announced similar deals so far this month, eager to ink agreements as oil prices rise from lows plumbed in 2015.
QEP plans to buy 9,400 acres in Texas from unnamed sellers, funding the deal by offering 20 million shares of its stock.
The offering was not immediately popular on Wall Street, and shares of QEP fell 3.2 percent to $18.70 in post-market trading after the deal’s announcement.
The deal is worth about $64,000 an acre, which is high compared with recent shale acreages in the United States, in part because of the Permian’s famously thick oil-bearing rock formations.
On a pure price per acre basis, acreage transactions inked since May have ranged between $11,190 an acre for Newfield Exploration Co’s purchase of assets from Chesapeake Energy Corp in Oklahoma, to around $14,557 in Marathon Oil Corp’s acquisition of PayRock Energy Holdings LLC.
Denver-based QEP said the new land offers 430 potential drilling locations, a 50 percent boost to the company’s possible drill sites in the Permian. The new land – in Martin County – is roughly 10 miles away from QEP’s existing acreage in the Permian.
The acreage currently produces 1,400 barrels of oil equivalent per day (boe/d) from vertical wells.
“We believe this acquisition, combined with our existing crude oil assets, will enhance our crudeoil production growth and improve our operating efficiency,” Chuck Stanley, QEP’s chief executive, said in a statement.
The deal is expected to close by September. (Reporting by Ernest Scheyder; Editing by Terry Wade and Andrew Hay)