SRC Energy to acquire DJ basin acreage from Noble for $608 million

SRC Energy Inc., Denver, has agreed acquire certain undeveloped land and nonoperated production in the DJ basin from Noble Energy Inc., Houston, for $608 million.

The deal includes 30,200 net acres adjacent to and south of SRC's existing acreage in Weld County, Colo. About half of the acreage is in Noble's Greeley Crescent area and the rest is in the Bronco area.

The acreage's third-quarter production of 4,100 boe/d represented nonoperated output of 2,500 boe/d and operated output of 1,600 boe/d. The commodity mix of the production was 50% natural gas, 30% NGLs, and 20% oil.

SRC notes the acreage includes high working interest and nearly all of the leasehold is held by production. Multiple development pads are already permitted, and more than 600 gross locations have been identified supporting mid- or long-lateral design.

The deal is effective Nov. 1 and expected to close on two separate dates, with acreage and nonoperated production included in the initial closing by yearend, followed by a second closing for operated producing properties by mid-2018.

SRC, a DJ basin-focused firm that was known as Synergy Resources Corp. until this year, said the deal will increase its leasehold by 50% and its drilling locations by 55%. Combined with SRC's existing acreage, the deal results in a consolidated core position of 90,000 net acres with more than 1,700 gross well locations that have predominantly mid- and long-lateral design.

"The operating efficiencies that we have gained over the past few quarters will transfer smoothly to this new acreage," commented Lynn A. Peterson, SRC chairman and chief executive officer. "We will begin working on our expanded position immediately with planning, permitting, and infrastructure buildout."

Gary W. Willingham, Noble's executive vice-president, operations, said the company was not likely to develop the acreage for several years and will continue to focus on the northern and eastern parts of the basin. "This is where we have a deep inventory of long lateral drilling opportunities in an oilier part of the basin and where our infrastructure provides a competitive advantage," he said.

Noble during the summer closed on the $1.225-billion sale of its upstream assets in northern West Virginia and southern Pennsylvania to HG Energy II Appalachia, LLC, a portfolio company of Quantum Energy Partners (OGJ Online, May 2, 2017). Noble's purchase of Clayton Williams Energy Inc., which dramatically expanded its Permian position, closed 2 months earlier (OGJ Online, Jan. 16, 2017).