Continental enters Wyoming Powder River basin, sets 2021 capex at $1.4 billion

Continental Resources Inc. has closed on a deal to acquire all Powder River basin assets of Samson Resources II LLC, Tulsa., Okla., and expects to begin delineating and developing the Shannon, Frontier, and Niobrara reservoirs with 2 rigs in second-quarter 2021.

Continental executed definitive documents earlier in the year to acquire the 130,000 net acres and 9,000 boe/d of production for $215 million, the company said in a Feb. 16 quarterly report. The deal includes 96 approved federal drilling permits.

“These Powder River basin assets provide Continental another oil-weighted platform, adding over 400 MMboe of net unrisked resource potential to our portfolio,” said Jack Stark, Continental Resources president and chief operating officer, as part of the report.

Continental is projecting a $1.4 billion capital expenditures budget, net of the Continental-Franco-Nevada Corp. subsidiary share of mineral costs (OGJ Online, Aug. 7, 2018). The company will allocate $1.1 billion to drilling and completion activities, of which 60% is allocated to the Bakken and 35% to Oklahoma, with the remainder allocated to the Powder River basin asset. An additional $300 million is being allocated to non-drilling and completion capital and is planned to be primarily for leasehold, mineral acquisitions, workovers, and facilities.

Annual crude oil production of 160,000-165,000 b/d is expected. Annual natural gas production is projected to be 880,000-920,000 Mcfd.

At yearend 2021, Continental expects to have a working backlog of 135 gross operated wells in progress in various stages of completion.

The company reported a net loss of $92.5 million for fourth-quarter 2020 and a full-year 2020 net loss of $596.9 million.

Full-year 2020 total production averaged 300,090 boe/d. Full-year 2020 oil production averaged 160,505 b/d. Full-year 2020 natural gas production averaged 837.5 MMcfd. Fourth-quarter 2020 total production averaged 339,307 boe/d. Fourth-quarter 2020 oil production averaged 176,639 b/d. Fourth-quarter 2020 natural gas production averaged 976.0 MMcfd.

Samson Resources II, meanwhile, in a Mar. 4 release noting the deal’s close, said it is beginning the process of winding down its affairs and moving toward final dissolution. The company has divested all of its upstream oil and gas assets except for 24,000 net leasehold acres, 23,000 net mineral acres, and 40 non-operated wells, all in East Texas, Oklahoma, and Louisiana, which are currently being marketed with expected divestment in this year’s second quarter.