So far, the North Dakota Petroleum Council and state Department of Mineral Resources (DMR) know nothing about a sale, spokespersons at each told NGI’s Shale Daily Friday. The purchase will add to Lime Rock’s existing Bakken assets.
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An acquirer and operator of various USA producing oil and gas properties, Lime Rock a year ago closed two E&P acquisitions totaling $533 million of working interests in oil and gas properties in North Dakota’s Williston Basin in Mountrail County, the third most active oil/gas county in the state. However, now because of lower crude oil prices, the worth of company’s assets has reduced five folds. Majority of its acreage in the state is in Dunn and Stark counties, which is even further south from Williams and McKenzie countries, where the current Bakken development is occurring. Currently, Occidental Petroleum is ranked as 16th largest oil producer in the state. Since mid-2014, many players announced to sell off their North Dakota assets, as the cost of drilling in the state increased.
Occidental’s Exit, A Wise Decision?
The sale comes less than three years after Oxy spent $8.8 million on a gleaming blue and gray steel headquarters for operations in the state, which Chazen bragged at the time helped boost the company’s oil production to an all-time high.
The oil market in North Dakota has not performed well in the past year.
The Forum News Service reports that traffic levels in Williston have grown 160 percent since 2008 as a result of the booming Bakken, with around 4,700 trucks passing through the city each day during the peak of oil traffic in 2012. Its regional office holds very less employees than its capacity.
Still, for ConocoPhillips, Whiting Petroleum Corp, Oasis Petroleum Inc and other oil companies pursuing pipeline or oil acreage sales, Oxy has set the bar low.
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Lime Rock, which already operates in North Dakota, is buying the assets as the oil industry contends with the worst crude price crash in more than six years, a drop the fund used to its advantage. Similarly in September 2014, it sold its 24.5% stake in Dolphin Energy Ltd. The news of selling its North Dakota assets appears does not come as a surprise to its investors, but the company has to make sure that it doesn’t sell off its assets at huge discount.
