In a bid to sharpen its focus on the prolific Permian play, QEP Resources, Inc. recently inked a deal to jettison its Haynesville shale holdings to Dallas-based private equity backed firm, Aethon Energy Management LLC.
Deal Highlights
Per the deal, Denver-based QEP Resources will divest its oil and gas producing properties, along with underdeveloped acreage and other midstream infrastructure in the Haynesville/Cotton Valley. The divested assets comprise acreage of around 49,700 net acres along with 137 gross operated wells. The region incorporates proved reserves of 159.8 million barrels of oil equivalent as of Dec 31, 2017.
The transaction, valued at $735 million, is set for closure in January 2019, subject to satisfactory closing conditions and other regulatory approvals.
Notably, QEP Resources' net production from these assets in the last reported quarter was 296.9 million cubic feet of gas equivalent per day. With the deal, the company bids adieu to Haynesville holdings and revs up its efforts to concentrate on the Permian shale play. The proceeds from the deal will be utilized to ramp up the development of its core Permian properties. In addition, the company intends to utilize the funds for debt repayments and share buyback programs to increase its shareholders’ value.
Slew of Divestments to Bolster Permian Focus
The deal is in line with the company’s strategy to actually become a Permian pure play. Of late, QEP Resources has been entering into various strategic deals to streamline its portfolio and sharpen focus on the more profitable Permian Basin.
Last July, it offloaded its natural gas assets in southern Wyoming, including Pinedale properties, in a $777.5-million deal. This July, it further inked a $155-million deal to sell its oil and gas assets in the Uinta Basin. Just around two weeks back, the company announced the divestment of its Williston Basin properties to Vantage Energy for $1,725 million in a cash-stock deal, which is expected to close by early second-quarter 2019. And of now, with its latest agreement to vend Haynesville assets, QEP Resources is set to become a Permian pure play.
In 2016, it bought around 9,400 acres in the Permian for $600 million. Last July, it inked another $732-million deal to acquire around 13,800 acres in the Permian Basin. In fact, QEP Resources has allocated about 65% of its 2018 capital budget for this lucrative play, as it aims to transform itself into a Permian pure play. Importantly, the company’s daily equivalent Permian production in the third quarter amounted to 4,792.5 thousand barrels, up 104% from the year-ago period.
While QEP Resources actively works on increasing its oil development drilling inventory in Permian through acquisitions, swaps and organic growth opportunities, the current pipeline pinch in the shale play remains a cause of near-term concern for this Zacks Rank #3 (Hold) company. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Deals Frenzy to Cash in on Permian Advantage
Even during oil slump, the Permian Basin continued to turn out as a moneymaker for many of the oil producers, owing to its low cost-high margin operational structure. Oil production in the region has been witnessing significant growth, with its current capacity of churning around 3 million barrels per day (Bpd), which is further expected to rise another 2 million Bpd by 2025. Further, with crude pricing strength of late, more and more oil producers are likely to enhance or capitalize their Permian portfolio, increase shareholders’ return and reduce costs.
As such, there has been a flurry of deals in the Permian region lately despite the pipeline crisis, owing to its attractive long-term economics. Just a day back, Cimarex Energy inked a deal to acquire smaller rival Resolute Energy Corporation , continuing the Permian consolidation trend. Not to forget, Concho Resources Inc. inked a mega $9.5-billion deal to acquire RSP Permian Inc this year, marking the biggest pure-Permian deal ever. Many other notable players like Apache Corporation, Parsley Energy Inc., Marathon Oil Corporation, among many others, have been entering into strategic deals to expand their Permian foothold.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>
Image: Bigstock
QEP Resources to Exit Haynesville, Boost Permian Presence
In a bid to sharpen its focus on the prolific Permian play, QEP Resources, Inc. recently inked a deal to jettison its Haynesville shale holdings to Dallas-based private equity backed firm, Aethon Energy Management LLC.
Deal Highlights
Per the deal, Denver-based QEP Resources will divest its oil and gas producing properties, along with underdeveloped acreage and other midstream infrastructure in the Haynesville/Cotton Valley. The divested assets comprise acreage of around 49,700 net acres along with 137 gross operated wells. The region incorporates proved reserves of 159.8 million barrels of oil equivalent as of Dec 31, 2017.
The transaction, valued at $735 million, is set for closure in January 2019, subject to satisfactory closing conditions and other regulatory approvals.
Notably, QEP Resources' net production from these assets in the last reported quarter was 296.9 million cubic feet of gas equivalent per day. With the deal, the company bids adieu to Haynesville holdings and revs up its efforts to concentrate on the Permian shale play. The proceeds from the deal will be utilized to ramp up the development of its core Permian properties. In addition, the company intends to utilize the funds for debt repayments and share buyback programs to increase its shareholders’ value.
Slew of Divestments to Bolster Permian Focus
The deal is in line with the company’s strategy to actually become a Permian pure play. Of late, QEP Resources has been entering into various strategic deals to streamline its portfolio and sharpen focus on the more profitable Permian Basin.
Last July, it offloaded its natural gas assets in southern Wyoming, including Pinedale properties, in a $777.5-million deal. This July, it further inked a $155-million deal to sell its oil and gas assets in the Uinta Basin. Just around two weeks back, the company announced the divestment of its Williston Basin properties to Vantage Energy for $1,725 million in a cash-stock deal, which is expected to close by early second-quarter 2019. And of now, with its latest agreement to vend Haynesville assets, QEP Resources is set to become a Permian pure play.
In 2016, it bought around 9,400 acres in the Permian for $600 million. Last July, it inked another $732-million deal to acquire around 13,800 acres in the Permian Basin. In fact, QEP Resources has allocated about 65% of its 2018 capital budget for this lucrative play, as it aims to transform itself into a Permian pure play. Importantly, the company’s daily equivalent Permian production in the third quarter amounted to 4,792.5 thousand barrels, up 104% from the year-ago period.
While QEP Resources actively works on increasing its oil development drilling inventory in Permian through acquisitions, swaps and organic growth opportunities, the current pipeline pinch in the shale play remains a cause of near-term concern for this Zacks Rank #3 (Hold) company. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Deals Frenzy to Cash in on Permian Advantage
Even during oil slump, the Permian Basin continued to turn out as a moneymaker for many of the oil producers, owing to its low cost-high margin operational structure. Oil production in the region has been witnessing significant growth, with its current capacity of churning around 3 million barrels per day (Bpd), which is further expected to rise another 2 million Bpd by 2025. Further, with crude pricing strength of late, more and more oil producers are likely to enhance or capitalize their Permian portfolio, increase shareholders’ return and reduce costs.
As such, there has been a flurry of deals in the Permian region lately despite the pipeline crisis, owing to its attractive long-term economics. Just a day back, Cimarex Energy inked a deal to acquire smaller rival Resolute Energy Corporation , continuing the Permian consolidation trend. Not to forget, Concho Resources Inc. inked a mega $9.5-billion deal to acquire RSP Permian Inc this year, marking the biggest pure-Permian deal ever. Many other notable players like Apache Corporation, Parsley Energy Inc., Marathon Oil Corporation, among many others, have been entering into strategic deals to expand their Permian foothold.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>