Evolution Petroleum Acquires Non-operated Oil and Natural Gas Assets for $26M in the Williston Basin
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Evolution Petroleum has closed on the acquisition of oil-weighted, non-operated oil and natural gas assets in the Williston Basin. The company acquired 50 percent of certain interests held by privately-owned Foundation Energy Management in North Dakota in Billings, Golden Valley, and McKenzie counties. The purchase price at closing was $25.9 million.
“We are pleased to announce this strategic transaction with Foundation. The transaction provides Evolution with immediate incremental free cash flow that will be used to further support our current dividend policy. The transaction also provides direct collaboration and involvement with our operating partner, Foundation, regarding the pace of asset development, including the ability to propose and execute targeted drilling and completion of potential drilling opportunities. This represents a significant increase in potential undeveloped reserves that we anticipate will be supportive of our dividend for many years to come,” said Jason Brown, president and chief executive officer.
“With a purchase price based on oil prices much lower than current levels, this acquisition complements our low decline, long-life portfolio and provides a presence in the prolific Williston Basin. We expect to quickly integrate the transaction with a minimal increase in overhead, similar to our purchase of interests in the Barnett Shale in 2021,” added Brown.
ASSET DETAILS
The acquired assets consist of 50 percent of Foundation’s interest, an approximately 39 percent working interest net to Evolution, in 73 producing wells in the Williston Basin in Billings, Golden Valley, and McKenzie counties, North Dakota, which was acquired by Foundation from a private seller in October 2021. The acquisition also included approximately 47,500 net acres with associated 400 potential drilling opportunities. The acquired assets consist of producing reserves of approximately 2.0 million barrels (MMBls) of liquids and 1,600 million cubic feet of natural gas (MMcf), using January 14, 2022 strip pricing. The commodity mix of the assets is 80 percent oil, 11 percent natural gas, and 9 percent natural gas liquids.
Evolution anticipates a number of the infill upside locations will be designated proved undeveloped (PUD) during the company’s year-end reserves evaluation, as limited by the SEC’s five-year PUD rule. Evolution expects the acquired drilling locations, of which more than 40 are already permitted and located on existing pads with infrastructure, will be funded out of future cash flow to support production and the company’s dividend. A limited drilling program is not expected to begin until 2023.
Foundation, an established operator in the geographic region, will be the operator of the assets. As part of the purchase and sale agreement, Evolution and Foundation have entered into a joint development understanding where a working relationship has been established to develop the asset area prudently and in both owners’ financial interest. As part of the agreement, Evolution has the ability to both propose and execute drilling locations within the asset footprint.
About Evolution Petroleum
Evolution Petroleum Corporation is an oil and natural gas company focused on delivering a sustainable dividend yield to its shareholders through the ownership, management, and development of producing oil and natural gas properties onshore in the United States. The company’s long-term goal is to build a diversified portfolio of oil and natural gas assets primarily through acquisition, while seeking opportunities to maintain and increase production through selective development, production enhancement, and other exploitation efforts on its properties. Its assets include non-operated interests in the Barnett Shale in North Texas, a CO2 enhanced oil recovery project in Louisiana’s Delhi field, a secondary recovery project in Wyoming’s Hamilton Dome field, and their interest in newly acquired properties in the Williston Basin in North Dakota.
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