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SM Energy Co. and non-op E&P Northern Oil and Gas (NOG) have closed deal to buy Uinta Basin operator XCL Resources in a transaction valued at a about $2.6 billion.
SM acquired an 80% undivided interest in XCL’s oil and gas assets in Utah as well as affiliated interests, including the option to buy assets adjacent to XCL, according to an Oct. 2 press release.
NOG, in a separate press release, also said it closed its previously announced acquisition of a 20% stake in XCL.
The companies also closed a related transaction for Uinta assets previously owned by Altamont Energy. Altamont’s assets, previously under contract to be purchased by XCL Resources, were offered to SM and NOG under a right of first refusal in connection with their XCL acquisition.
For SM, the Uinta acquisitions add approximately 63,300 net acres and estimated 465 net locations normalized to 10,000 ft laterals with a high oil cut of 86% to 87% of production.
SM said XCL’s estimated net proved reserves were approximately 110 MMboe.
The assets also include a centrally located sand mine that began operations in September.
SM’s portion of the Uinta transactions totaled $2.1 billion with an effective date of May 1, 2024. SM Energy intends to fund the Uinta deals with a portion of the proceeds from its recent $1.5 billion offering of senior notes issued in July, as well as cash on hand and borrowings.
NOG said the Uinta transactions give NOG more than a decade of Tier 1 inventory across ~15,800 net acres in the Uinta, with ~116 net underwritten undeveloped locations and additional exploration upside potential.
At closing, NOG paid $511.2 million in cash.
SM President and CEO Herb Vogel said the company adds a third core area of high-quality assets to the SM portfolio. The company also holds positions in the Midland Basin and the Eagle Ford Shale.
“We look forward to welcoming new employees to the SM team from XCL Resources and Altamont Energy and to working in our new Utah communities,” he said. “The Uinta Acquisitions add significant scale and long-term value creation opportunity for SM Energy via high-quality, oily stacked pay with outstanding well economics."
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