QEP Resources To Buy Oil Properties In Permian Basin For About $950 Mln

(RTTNews) - Oil and natural gas company QEP Resources Inc. (QEP) said Monday that it has agreed to acquire oil and gas properties in the Permian Basin for about $950 million, enabling it to continue its strategic focus on high-margin crude oil and natural gas liquids production. The company's board of directors unanimously approved the acquisition.

Denver, Colorado-based QEP Resources said that its wholly owned subsidiary QEP Energy Co. has signed a definitive agreement to acquire the assets. The properties are located in the Midland sub-basin, primarily in Martin and Andrews counties in west Texas. The properties currently have net production of about 6,700 barrels of oil equivalent per day or Boepd, of which about 68 percent is crude oil.

QEP Resources noted that the acquisition will add reserves of about 47 million barrels of oil equivalent or MMBoe, and has estimated net recoverable resources of about 300 MMBoe. The properties have potential for over 200 vertical and up to 775 horizontal drilling locations.

Chuck Stanley, Chairman, President and CEO of QEP Resources said, "This Acquisition is part of our continuing strategy to become more focused on crude oil and natural gas liquids. Our New Ventures team has been actively focused on expanding our footprint in the world-class crude oil provinces of North America, first in the Williston Basin and now in the Permian Basin."

Stanley added that while QEP Resources evaluated numerous potential opportunities in the Permian Basin, none met its acquisition criteria until now.

QEP Resources plans to fund the acquisition of the Permian Basin oil properties with proceeds from its revolving credit facility and cash on hand, and expects to close the transaction on or before January 31, 2014.

In addition, QEP expects to sell various non-core E&P assets located in the Midcontinent during the first half of 2014, enabling the company to maintain a strong balance sheet and to have adequate liquidity.

Pro forma for these transactions, QEP Resources expects to focus its capital spending in its two premier oil assets - the Williston and the Permian basins, and its two liquids-rich gas assets - the Pinedale Anticline and the Lower Mesaverde play in the Uinta Basin.

Stanley added, "Along with the planned separation of QEP Field Services Company, the Acquisition and the anticipated asset sales will continue the Company's transformation into a liquids-focused, pure-play E&P company with assets located in premier basins across North America."

QEP Resources had been under pressure from hedge fund and activist shareholder Jana Partners LLC, which urged the company to form an independent committee to evaluate the separation or spin off of QEP Resources' midstream business, QEPFS.

Last Monday, QEP Resources said it has decided to pursue a separation of its midstream business, including the company's interest in QEP Midstream Partners, LP (QEPM).

QEP closed Friday's trading at $31.43, down $0.34 on a volume of 2.13 million shares.