Acquisition increases Hoxbar holdings by 42%
Unit Corporation (ticker: UNT) announced the acquisition of 8,335 net acres in western Oklahoma for approximately $57 million. The acreage is located primarily in Grady and Caddo Counties, in the Hoxbar area of the Mid-Continent.
The acreage acquired in this transaction is almost all contiguous with Unit’s current acreage in the area. Total Unit acreage in the Hoxbar will increase from about 19,700 acres to 28,000 acres, a 42% increase. According to the company, the acquired acreage has proved reserves of 3.2 MMBOE and 1,367 BOEPD of current production.
Source: Unit IPAA Presentation
Unit estimates that this acquisition adds 65 gross potential horizontal drilling locations. The acreage is adjacent to the Norge Marchand Waterflood Unit. According to the company, each Marchand well has an average EUR of over 500 MBOE and is economic at current prices. The acquisition provides additional operational control to many areas of the Marchand zone of the Hoxbar reservoir for secondary recovery. It is anticipated that the initial phase of waterflooding this area will increase reserves by at least 500 MBOE per well.
The acquisition cost is $56.75 million in cash and 180 net acres in McClain County. Unit plans to fund this purchase through an equity offering. Up to $100 million may be raised through an at-the-market offering of common stock.
“We are pleased to announce this strategic acquisition,” commented Larry D. Pinkston, Unit President and CEO. “This is an important growth step for Unit and represents an advantageous addition in one of our core areas that we have been working to expand. For our upstream business segment, it will increase our Hoxbar total core area position to approximately 28,000 net acres and increase our working interest in many sections. We plan to pick up a rig in the second quarter to continue developing the area. Coupled with the waterflood potential, we believe the value of this core holding will be significantly enhanced.”
