Oasis Petroleum Inc (OAS.N) will buy oil and gas assets in the Williston Basin in North Dakota from a clutch of sellers including Magnum Hunter Resources Corp (MHR.N) for about $1.52 billion, boosting its production by nearly a third.
Oasis, which signed four separate deals, will add about 161,000 net acres to the 331,000 net acres it already holds. Production will increase by 9,300 barrels of oil equivalent (boe) to 43,000 boe.
The deal value works out to about $7,000 per acre, assuming daily production at $60,000 boe per day, said Eliecer Palacios, chief executive at PetroRock Energy, a global investment management and advisory firm.
The price compares favorably as Oasis has been valued at $11,000 per acre, Palacios said.
Oasis shares were up 5 percent at $41.58 at midday on the New York Stock Exchange.
Magnum Hunter in a regulatory filing said on Wednesday it signed an agreement with Oasis to sell a non-operated working interest in certain oil and gas properties in North Dakota for about $32.5 million.
Richard Robuck, an Oasis spokesman, confirmed that the deal with Magnum Hunter was one of the four agreements announced on Thursday, but did not name the other sellers.
The company said in a regulatory filing on Thursday that it had acquired 136,000 net acres from a private seller.
Oasis said it expects to keep production levels at the acquired assets relatively flat through the end of 2013. The four deals are expected to close in October.
The company plans to ramp up drilling across its combined position next year, operating 15 to 16 rigs by the end of 2014. Oasis operates 11 rigs currently. Oasis two rigs were being operated by the sellers, without naming them.
The shale revolution has made North Dakota the most prolific oil-producing state after Texas and contributed to a U.S. revival in output. The state's production exceeds that of countries such as Britain and OPEC member Ecuador.
Whiting Petroleum Corp (WLL.N) last week bought nearly 40,000 acres of land in the Bakken shale formation for $260 million, while Triangle Petroleum Corp (TPLM.A) last month purchased assets in the Williston Basin from Kodiak Oil & Gas Corp KOG.N.
SunTrust Robinson Humphrey analysts said the price paid by Oasis was "somewhat favorable" compared to these transactions.
"As some have been concerned about (Oasis) stepping outside the (Bakken) to bolster inventory, this announcement could cause some to breathe a sigh of relief," the analysts said.
Oasis said it had increased its borrowing base to $1.5 billion from $1.25 billion.
Oasis' debt to earnings before interest, taxes, depreciation, and amortization ratio is just about 1.2 times on 2014 estimates, making it one of the best balance sheets in the exploration and production group, said Palacios.
(Reporting by Swetha Gopinath in Bangalore; Editing by Saumyadeb Chakrabarty, Maju Samuel)