Natural Resource Partners LP (NYSE: NRP) has entered the Bakken Shale/Three Forks play with an agreement to purchase non-operated working interests in producing oil and gas properties in the Williston Basin of North Dakota and Montana from Abraxas Petroleum Corp. (NASDAQ: AXAS) for approximately $35.3 million in cash.
The acquisition consists of approximately 13,500 net acres that are held by production with an estimated average working interest of 11% in the Bakken/Three Forks play. The acquisition includes approximately 120 producing wells in addition to interests in 22 wells that are in various stages of development. NRP anticipates funding $8.1 million in additional capital expenditures associated with these new wells in 2013, a portion of which will be paid at closing. NRP expects the acquisition to close in the third quarter of 2013 and to be immediately accretive to NRP's unitholders.
"This acquisition marks NRP's strategic entry into the Bakken play and into owning non-operated working interests in oil and gas assets," said NRP president and COO Nick Carter.
Natural Resource Partners LP is a master limited partnership headquartered in Houston, TX, with its operations headquarters in Huntington, WV. NRP is principally engaged in the business of owning and managing mineral reserve properties. NRP primarily owns coal, aggregate and oil and gas reserves across the United States that generate royalty income for the partnership.
The acquisition will have an effective date of March 1, 2013 and is subject to customary closing conditions and purchase price adjustments.
Abraxas to accelerate core area growth
By selling the majority of its non-operated Bakken Shale properties, San Antonio, TX-based Abraxas Petroleum is shifting its focus to a core operated portfolio.
Inclusive of the non-operated Bakken sale, Abraxas has divested approximately 502 boepd for gross proceeds of $47.3 million since the beginning of 2013. These asset sales have also removed approximately $10 million of budgeted CAPEX commitments for Abraxas. It is Abraxas’ intention to use the proceeds from these sales to pay down the company’s bank line before being ultimately redeployed to accelerate growth in the company’s core areas. Taking these asset sales into effect, Abraxas now projects production of 4,550-4,700 boepd for 2013.
Bob Watson, president and CEO of Abraxas commented, “This is obviously a transformational day for Abraxas as we significantly reduce our leverage while simultaneously shifting our focus to a core operated portfolio. Heading forward we will continue to rationalize our asset base to focus on our core operated properties primarily in the Bakken and Eagle Ford. Moreover, the removal of the non-operated Bakken assets from our portfolio will provide the company with a much more predictable production growth profile and CAPEX schedule. We look forward to updating the market shortly as we evaluate opportunities to accelerate growth in our core operated areas.”
The company’s transformation is seen as a positive by Global Hunter Securities analysts. “We like AXAS’s push to become a more focused company (concentrating on its core Bakken and Eagle Ford acreage which is top-tier) while chipping away at its long-term debt, which stood at $130MM at Q1-end (89% net debt/cap and >3x EBITDA). The next data points to watch are from AXAS's first 4-well Bakken pad and downspacing tests in the Eagle Ford,” said the analysts in a note to investors Monday.
E-Spectrum Advisors LLC acted as divestiture agent for Abraxas on the sale.