QEP Resources, Inc. (QEP - Free Report) recently inked a $155-million deal to offload its oil and gas assets in the Uinta Basin, in a bid to sharpen focus on the prolific Permian play. Middle Fork Energy Partners, LLC will be purchasing the Uinta assets located in Duchesne and Uintah counties in eastern Utah.
The divested assets comprise acreage of around 230,000 net acres and incorporate 605 billion cubic feet equivalents of proved reserves as of Dec 31, 2017. QEP Resources' net production in the last reported quarter, from the Uinta assets, was 54 million cubic feet of gas equivalent per day. Around 26% of the production was liquids.
The deal is in line with QEP Resources’ strategy to streamline portfolio. The company has been entering into various strategic deals of late to sharpen focus on the more profitable Permian Basin and upgrade portfolio. QEP Resources currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
QEP Resources, Inc. Price
In 2016, it bought around 9,400 acres in the Permian for $600 million. Last July, it jettisoned its non-core gas assets located in southern Wyoming in a $777.5-million deal. In the same month, it inked another $732-million deal to acquire around 13,800 acres in the Permian Basin. In fact, the company allocated about 65% of its 2018 capital budget for this lucrative play as it aims to transform itself into a Permian pure-play.
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. The region's extensive pipeline infrastructure, plentiful labour and supplies, and relatively warm winters make year-round work possible. 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 owing to its attractive economics. Oasis Petroleum Inc. (OAS - Free Report) dived into the Permian with a $946-million acreage buyout in December 2017. This year Concho Resources Inc. (CXO - Free Report) inked a mega $9.5-billion deal to acquire RSP Permian Inc. Many notable players like Apache Corporation (APA - Free Report) , Noble Energy Inc., Parsley Energy Inc., Marathon Oil Corporation, among others, also entered into strategic deals to expand their Permian foothold.
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