Oasis Petroleum Exits the Permian Basin
NYSE-listed Oasis Petroleum Inc. has entered into a series of definitive agreements with an undisclosed buyer or buyers to divest its Permian basin assets for a total consideration of US$406 million, plus certain additional contingent payments. The transaction represents Oasis Petroleum’s exit from its operations in the Permian basin.
Under the terms of the deal, Oasis Petroleum will divest the assets for a total consideration of US$406 million. In addition, three annual contingent payments of up to US$25 million each (for a total of up to US$75 million) in 2023, 2024 and 2025, will also be payable if WTI averages over US$60 per barrel in each respective year.
The assets divested include approximately 24,000 net acres of Permian basin assets located across Loving, Winkler, and Ward counties in Texas. The acreage is 74% held by production, and primarily targets the Bone Spring and Wolfcamp shale formations. The assets also include 57 gross (53.4 net) operated producing horizontal wells in the area. As of December 31, 2020, the total proved (1P) reserves attributable to the acreage were approximately 30.4 million barrels of oil equivalent (MMboe), of which approximately 80% was oil. The assets have an average daily production of approximately 7.2 thousand barrels of oil equivalent per day (Mboe/d), during Q1-2021, of which around 81% was oil.
“The decision to exit the Permian basin while building scale in the Williston basin is fundamentally based on aligning company resources with our core competitive strengths and strategic focus of building a sustainable enterprise which generates significant free cash flow for the benefit of the company and shareholders. The successful conclusion of our Permian divestiture process allows us to bring substantial value forward from an asset that was difficult to scale, strengthens our balance sheet from already peer-leading levels, and allows us to focus our attention on driving significant value from our world-class Williston acreage position, where we see great upside opportunity and long-term running room,” said Danny Brown, Oasis Petroleum’s CEO.
Houston-based Oasis Petroleum is focused on the acquisition and development of unconventional oil & gas resources in the Williston basin in North Dakota and Montana, and the Delaware basin in West Texas.
JP Morgan Securities is acting as strategic and financial advisor to Oasis Petroleum.
The transaction is subject to customary closing conditions, and is expected to be completed around June 30, 2021.