SAMSON Oil & Gas USA will acquire a 20,762.4 hectare parcel of oil and gas leases in North Dakota and Montana for $16.5 million, the company has announced.
Containing 41 producing oil and gas wells, as well as some that are currently shut-in, Samson said it expected the properties would produce about 720 barrels of oil per day.
Netherland Sewell & Associates has estimated 8.5 million barrels of proven reserves are present in the project area, boasting a net present value of $84.9 million, though this was subject to change depending on the strength of oil prices.
Samson will have the right to exploit hydrocarbons down to the top of the Bakken formation across the permit areas, with the company also acquiring the rights to the deeper geologic section below the Bakken pool.
The transaction is conditional, amongst other things, on Samson being able to use its existing $50 million debt facility which has a current borrowing base of $19 million.
If it proceeds, Samson will first focus on the 17 proved, developed but non-producing (PDNP) wells in the assets, saying it expected these well could be brought back on line with minimal expenditure.
“With the current lower oil service costs, Samson envisages development of the acquired proved undeveloped (PUD) reserves by using longer laterals, infilling the historical 640 acre wells or developing 40 acre infills adjacent to existing or known production,” the company said.
Using an acid-based stimulation method for the existing PDP and PDNP wells in light of the reservoir’s calcium carbonate-based architecture will also provide an upside, Samson said.
“No stimulation of these reservoirs has ever been undertaken but this style of stimulation treatment has resulted in a three to four- fold uplift in production rates in other wells in the region.”
“Samson believes that the larger upside in the acquired properties resides in the PUD category, which will be realised through infill drilling development.”