Continental Resources enters JV to develop Northwest Cana Woodford shale
Continental Resources enters JV to develop Northwest Cana Woodford shale
OKLAHOMA CITY, Oklahoma -- Continental Resources has formed a JV with a wholly owned U.S. subsidiary of SK E&S Co. Ltd to jointly develop a significant portion of Continental's Northwest Cana Woodford natural gas assets, primarily in Blaine and Dewey counties, Oklahoma.
SK E&S is a subsidiary of SK Group, one of the largest conglomerates in South Korea and part of SK Holdings, a Fortune Global 100 company.
Continental sold a 49.9% interest in approximately 44,000 net acres in the highly prospective Northwest Cana area of the Anadarko Woodford shale play, including interests in 37 producing wells, for a total consideration of approximately $360 million. Continental received $90 million at closing, and SK has committed to pay an additional $270 million to carry 50% of Continental's remaining share of future drilling and completion costs. Continental anticipates no change in its 2014 and 2015 capital expenditures, its production mix of crude oil and natural gas, or its overall production targets as a result of this agreement.
"We are excited to establish this joint venture with such an established and highly regarded major international energy company," said Harold G. Hamm, Continental's Chairman and CEO. "We are proud SK has chosen to join with Continental in SK's initial investment in U.S. shale natural gas."
J. J. Yu, President and CEO of SK E&S, said, "SK E&S is pleased to join with Continental Resources, a proven leader in developing U.S. unconventional resource plays, in what we expect will be a long-term strategic relationship in energy production."
Continental and SK have entered into a joint development agreement (JDA) under which Continental has five years to utilize the carry, subject to extension under certain circumstances. The JDA also establishes an area of mutual interest (AMI) in Northwest Cana and certain incentives for the JV to expand its leasehold position.
Continental will be the operator for all current and future wells that are operated by the JV. The company plans to commence drilling in the AMI during November 2014, with four operated rigs running by the end of the year.
