Natural Resource Partners L.P. (NRP - Analyst Report) announced that it has an inked an agreement to buy a non-operated stake in oil and gas assets located in the Bakken/Three Forks formation from Abraxas Petroleum Corp (AXAS - Snapshot Report).
The partnership will shell out $35.3 million in cash for this acquisition. The agreement will be concluded in the third quarter 2013 and is subject to customary closing conditions as well as purchase price adjustments.
The Bakken play is placed in the Williston Basin located in the states of North Dakota and Montana. The asset purchase will have an effective date of Mar 1, 2013. With this strategic deal, the partnership will gain entrance into the resource-rich Bakken play.
Per the agreement, Natural Resource will purchase roughly 13,500 acres of productive area which translates to an estimated 11% working interest in the play. This consists of around 120 producing wells and also interests from a supplementary 22 wells, currently in various phases of development.
The partnership intends to make additional investment of $8.1 million for the development of these wells in 2013, a part of which will be paid during the close of the agreement. Natural Resource expects the deal to be immediately accretive to its unit holders.
The latest acquisition by Natural Resource Partners will diversify the partnership’s revenue stream and lend constancy to growth. Of late, the partnership has been venturing into unconventional resource plays to broaden its resource portfolio. In early 2013, it procured a 48.51% interest in OCI Wyoming L.P.’s Trona ore mining and soda ash units which will prove profitable for the partnership given the rising demand in Asia.
Royalties from oil and gas properties steadily increased to 3% in 2012 from 2% in 2005. The current interest purchase in the Bakken play will further support Natural Resource to achieve its revenue target range of $330 million to $375 million in 2013.The partnership also stands to benefit significantly from the shale gas boom in the U.S. market.
However, transportation cost pressure might act as a deterrent to the partnership’s opportunities. Currently, Natural Resource retains a Zacks Rank #3 (Hold).
Other industry players presently positioned well are Zacks Ranked #2 (Buy) Alliance Holdings GP, LP (AHGP - Snapshot Report) and Alliance Resource Partners LP (ARLP - Snapshot Report).
Headquartered in Houston, Texas, Natural Resource along with its subsidiaries engages in the ownership, management, and leasing of mineral properties in the United States.