QEP Resources Inc. (QEP), the energy producer targeted by activist investor Jana Partners LLC, agreed to buy Permian Basin assets for about $950 million to increase production of “high-margin” crude oil and natural gas liquids.
The acquisition from EnerVest Ltd. includes 26,519 net acres in the Midland sub-basin, mainly in Martin and Andrews counties in West Texas, Denver-based QEP said today in a statement. The assets currently produce 6,700 barrels of oil equivalent a day, of which 68 percent is crude.
QEP, the third-worst performer this year among peer U.S. exploration and production companies, said the purchase adds proved reserves of about 47 million barrels of oil equivalent and 300 million barrels of potentially recoverable resources. It comes after the company bowed to pressure from Jana earlier this month to pursue the separation of its gas gathering and processing business.
“This acquisition allows us to leverage our competitive strength of drilling horizontal development wells in multi-pay, stacked reservoirs,” QEP Chief Executive Officer Chuck Stanley said in today’s statement.
QEP will pay for the purchase with cash on hand and from its revolving credit facility. It intends to sell unspecified non-core assets in the mid-continent region in the first half of 2014, according to the statement. Spending will be focused on the Permian and North Dakota, as well as wells in the Pinedale Anticline in the Rocky Mountains and the Uinta Basin in Utah.
EnerVest, a closely held oil and gas company based in Houston, said in a separate statement that the transaction is expected to close by Jan. 31. It bought most of the properties in September 2012.
Production from the Permian Basin reached 312 million barrels last year, according to the Railroad Commission of Texas.
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