Buying up the Bakken: Continental to purchase 120,000 acres for $650M
The largest leaseholder in the Bakken is prepared to increase its stake here by $650 million.
Continental Resources Inc. is doubling down on its already substantial investment in the Bakken, according to a press release issued by the company this week.
Continental has entered into an agreement to purchase 120,000 acres of undeveloped Bakken land -- primarily in Divide and Williams counties -- said Continental Vice President of Investor Relations Warren Henry.
"The cornerstone of our growth strategy for the next five to 10 years is our concentration in the Bakken," Henry said. "The returns we see from the Bakken are very positive. We expect it to be a decades-long play."
The news of Continental's additional investment came immediately after a landslide victory for President Barack Obama over former Massachusetts Gov. Mitt Romney on Tuesday, something some Oil Patch workers have feared would slow production in the region.
"The Obama administration has been talking about energy independence for a long time," Henry said. "We believe that the administration wants to, as it has said, have an all-of-the-above energy policy that is environmentally safe when it comes to oil and gas exploration and production. We're fully on board with that."
Continental is the largest leaseholder in the Bakken with more than 984,000 net acres as of September. The announced acquisition -- which is set to close next month -- would bring the total number of acres being developed by Continental to 1.1 million acres.
"It's encouraging to see the continued investment in North Dakota," said Lynn Helms, director of the state's Oil and Gas Division. "As one of the state's largest producers, this purchase shows the good faith Continental has in the long-term productivity of the Bakken."
The news of the purchase came at the same time as an announcement by Continental that it has agreed to sell a number of oil- and natural gas-producing properties in its East Region for $125 million, a sign that the company is shifting its focus toward more oil production in North Dakota.
"We have $2.9 billion in capital allocations for drilling and drilling activities in our budget for 2013," Henry said. "About two-thirds of that is for our activities in the Bakken and that number could go even higher. The reports we're getting are that the civic infrastructure (in North Dakota) is catching up very quickly. With multi-pad drilling and the increase in infrastructure, we think that will make things more constructive for the communities impacted by the play."
Halliburton, another major player in the development of the Bakken, seemed similarly undeterred by the prospect of another four years of the Obama administration.
"We look forward to continuing our work with the president's administration and helping him fulfill his campaign promise to increase domestic oil and natural gas production," said Halliburton spokesperson Susie McMichael. "This will help to create American jobs, strengthen our economy and foster greater energy security for the nation."
Henry said he expects North Dakota's Oil Patch to remain productive and continue to produce "plenty of jobs" for the next "20 to 25 years."