* To sell assets to Bakken Hunter, unit of Magnum Hunter
* Baytex reduces 2012 production outlook to 53,500-54,500
* Magnum Hunter to increase capex spend in the region
* Magnum to fund buy, higher capex with loan
By Abhiram Nandakumar
April 18 Baytex Energy Corp said its
U.S. subsidiary has agreed to sell its non-operated interests in
the Williston Basin in North Dakota to a unit of Magnum Hunter
Resources for $311 million.
The assets being sold to Bakken Hunter had proved reserves
of 12.4 million barrels of oil equivalent as of Dec. 31, and
produce about 950 boe/d of Bakken light oil.
Baytex said the deal would lower its 2012 production by 500
barrels of oil equivalent per day (boe/d) to between 53,500
boe/d and 54,500 boe/d.
"The Assets are not a primary focus of our U.S. business
unit as they are non-operated and generally have a lower average
working interest than our remaining lands," the company said in
Baytex said its exploration and development budget remains
at C$400 million ($405.04 million) and it still intends to drill
20 to 25 wells in North Dakota this year.
MorningStar analyst Robert Bellinski said selling the assets
is a prudent move for Baytex.
"It's always good to prune your portfolio and make sure
you're concentrating on your best assets. Baytex does a really
good job at that," he said.
Baytex, which intends to use the proceeds from the sale to
pay down debt, said the assets represented about 40 percent of
its current U.S. production.
BMO Capital Markets-Canada analyst Gordon Tait said Baytex
got a very good price for what were essentially non-core assets.
"They got $327,000 per flowing barrel of oil equivalent
(boe) and Baytex is currently trading at $144,000 per flowing
boe," he said.
A flowing barrel of oil equivalent corresponds to a
production rate of 1 barrel of oil equivalent per day (boe/d).
MAGNUM TO RAISE CAPEX
Separately, Magnum Hunter said it will now spend $50 million
more in capital expenditure in the Williston Basin area and
expects to increase its upstream capital budget to about $225
million from $150 million.
Magnum said it has secured commitment letters for a new $450
million loan to fund the acquisition, pay off an existing loan
and meet the higher capital expenditure target.
With the deal, Magnum Hunter's non-operated working interest
in the acquired acreage will increase to 47.5 percent from 10
Baytex shares fell marginally to C$49.12 on Wednesday
morning on the Toronto Stock Exchange, while Magnum Hunter fell
4.5 percent to $5.90 on the New York Stock Exchange.