Oil and natural gas exploration company QEP Resources Inc (QEP.N) said one of its units has agreed to buy crude oil properties in North Dakota from multiple sellers for about $1.38 billion in cash to grow its core acreage in the Williston Basin.
Dwindling natural gas prices have pushed oil and gas companies to shift focus to more lucrative oil and natural gas liquids. In the April-June quarter natural gas prices have fallen 46 percent from last year to average $2.40 per million British thermal unit.
QEP expects the transaction to close by September 27 and add to earnings in the fourth quarter.
“We expect the growth potential of these assets to have a significant impact on our overall production and more specifically on our crude oil production,” QEP Chief Executive Chuck Stanley said in a statement.
The properties, which are located in Williams and McKenzie counties of North Dakota, have an aggregate net proved and probable reserves of about 125 million barrels of oil equivalent, the company said in a statement.
The transaction will raise QEP’s net acreage in the Williston Basin to about 118,000 acres.
Denver-based QEP raised its full-year adjusted core-earnings forecast to between $1.40 billion and $1.45 billion from its earlier forecast range of $1.35 billion to $1.40 billion.
QEP also raised its production outlook to between 310 billions of cubic feet equivalent (bcfe) and 315 bcfe from its prior forecast range of 305 bcfe to 310 bcfe. The company raised its annual budget to between $1.50 billion and $1.55 billion from $1.45 billion to $1.50 billion earlier.
Shares of QEP, valued at $4.83 billion, closed at $27.18 on the New York Stock exchange on Thursday.