Unit Buys Assets From Noble

Unit Petroleum Co., a wholly-owned subsidiary of Unit Corp. (NYSE: UNT), plans to buy 84,000 net acres primarily in the Granite Wash, Cleveland and Marmaton plays in western Oklahoma and Texas panhandle from Noble Energy Inc (NYSE: NBL) for $617 million in cash.
The effective date of this acquisition is April 1, 2012, and closing is anticipated to be in September 2012.

The estimated proved reserves of the subject properties is 44 million barrels of oil equivalent (MMboe) and the estimated average daily net production is 10,000 barrels of boe. The acquisition will add approximately 25,000 net acres to Unit Petroleum’s Granite Wash core area in the Texas Panhandle with significant resource potential and would include 617 potential horizontal drilling locations. The subject acreage is characterized by high working interest and operatorship, and 95% of the subject acreage is held by production. Unit will also receive two gathering systems as part of the transaction.

Larry D. Pinkston, Unit's president and chief executive, says “This is an important growth step for Unit and represents a unique opportunity that benefits all three of our business segments. For our upstream business segment, it will more than double our acreage in the Granite Wash Texas Panhandle core area, a highly prolific liquids-rich fairway in the Anadarko Basin. We plan to accelerate the drilling activity in the acquired properties over the next 12 to 18 months using seven rigs from our contract drilling segment, and we plan to operate the acquired gathering systems and, as appropriate, replace existing third party processing contracts beginning in 2015."

The deal will provide Unit with additional inventory of drilling opportunities that will allow us to significantly grow its production in the Anadarko Basin focused on oil- and liquids-rich gas targets.

Unit intends to finance the acquisition with long-term debt. In conjunction with the acquisition, Unit intends to increase commitments under its existing credit facility from $250 million ($600 million borrowing base) up to $750 million ($800 million borrowing base). In addition, Unit Petroleum has identified $200 to $300 million of certain upstream assets it is considering selling.