Equinor ASA agreed on Feb. 10 to divest its entire Bakken Shale position as part of the Norwegian company’s strategy of optimizing its oil and gas portfolio, according to its CEO.
Grayson Mill Energy LLC, a Houston-based E&P company backed by EnCap Investments LP, will acquire Equinor’s interests in the Bakken field for a total consideration of around $900 million. The transaction covers all of Equinor’s operated and nonoperated acreage, totaling 242,000 net acres, and associated midstream assets in North Dakota and Montana. Production from these assets in fourth-quarter 2020 was 48,000 boe/d (net of royalty interests).
“Equinor is optimizing its oil and gas portfolio to strengthen profitability and make it more robust for the future,” Anders Opedal, president and CEO of Equinor, said in a statement. “By divesting our Bakken position we are realizing proceeds that can be deployed towards more competitive assets in our portfolio, enabling us to deliver increased value creation for our shareholders.”
Between 2007 and 2019, Equinor recorded an accounting loss of $21.5 billion on its overall U.S. activities, including $9.2 billion due to impairments of onshore shale and other assets, Reuters reported Feb. 10 citing a company-commissioned report by accountants PwC.
In addition to the Bakken, Equnior’s oil and gas portfolio in the U.S. also includes positions in the Marcellus/Utica shale formations in the Appalachian Basin and the Louisiana Austin Chalk plus offshore assets in the Gulf of Mexico. The company had previously held assets in the Eagle Ford Shale but sold them to Repsol SA for $325 million in 2019.
Separately, Equinor reported on Feb. 10 a record annual net loss of $5.5 billion for 2020 due to large write-downs that were the result of the pandemic-driven drop in oil and gas prices. The company also cut its planned capex for 2021-22.
Equinor has been active in the Bakken since its acquisition in 2011 of Brigham Exploration Co. The roughly $4.7 billion transaction provided the company, operating as Statoil at the time, with more than 375,000 net acres in the Williston Basin.
As part of the agreed transaction on Feb. 10, all Equinor field employees and a significant number of the support teams working on the Bakken assets will have the opportunity to transfer to Grayson Mill Energy, according to the company release.
Additionally, Equinor Marketing and Trading will enter into a term purchase agreement for crude offtake with Grayson Mill Energy in parallel with the transaction.
According to EnCap’s website, the private equity firm made its initial investment in Grayson Mill Energy in 2016. The company is led by CEO Eric Bayes, who previously was with Oasis Petroleum Inc.
The effective date of the transaction is Jan. 1. Closing is subject to the satisfaction of customary conditions, including authority approvals.
This story was updated at 8:55 a.m. CST Feb. 10.
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