SandRidge Energy Inc. (NYSE: SD) has agreed to acquire the assets of EE3 LLC in a privately negotiated transaction for $190 million in cash. The transaction is expected to close in the fourth quarter of 2015. With this acquisition, SandRidge will have a material, derisked Niobrara shale position in the North Park Basin, Jackson County, Colorado.
The concentrated acreage position in Niobrara Shale play has similar geologic characteristics to the Denver-Julesburg Basin Niobrara shale, with five stacked benches at depths of 5,500 feet to 9,000 feet, reservoir thickness over 450 feet, oil in place greater than 55 MMBo per section, and overpressured reservoir above 0.55 psi per foot.
SandRidge President and CEO James Bennett said, "Our rightsized and derisked acquisition of assets in the North Park Basin deliberately matches our expertise with a clear line of sight to over 1,300 high-return drilling locations. Expanding into a proven high-quality repeatable oil play leverages our core competencies in medium-depth horizontal drilling, unconventional development, infrastructure, and cost reduction. Significant upsides include additional zones beyond the proven Niobrara D bench, deploying our Mid-Continent multilateral, extended lateral designs and improved completion designs. We will be mobilizing to spud our first well in January.”
Commenting on the deal in a note to investors Thursday, analysts with Raymond James Equity Research note that the deal will “materially increase drilling inventory” with 136,000 net acres of development potential, leading to an initial stock uptick as diversifying into the oily Niobrara is likely to be viewed favorably; however, the analysts are “still trying to get a look behind the curtain, as it is not clear what the strategy is, given one week it is acquiring assets (Pinon gathering asset, Niobrara) and the next it is struggling to preserve liquidity (suspension of preferred dividend, debt restructuring).”