SandRidge Energy signs $200m deal to develop wells in NW STACK in US
SandRidge Energy has signed a $200m agreement with an undisclosed private investment fund to develop wells in the NW STACK in north-west Oklahoma, US.
Under the agreement, the parties will undertake a wellbore-only drilling programme targeting the Meramec formation in Major and Woodward counties.
The agreement will be carried out in two tranches, wherein the private investor will offer $100m in the first tranche with an option for a further $100m in the second tranche.
In exchange for the investment, the private firm, which is required to incur 90% of the drilling costs, will be offered an 80% working interest in each wellbore.
SandRidge Energy president and CEO James Bennett said: “Our strategy remains consistent as we move into the second half of the year: while protecting our unlevered balance sheet, maintaining a modest outspend and utilising strong cash flow from our Mississippian properties, we will prudently develop our oil-weighted NW STACK and North Park Basin assets.
“To that end, ongoing drilling activity remains focused on growing oil production and creating resource value in both of our focus areas.
“The drilling agreement announced today highlights the value of our NW STACK position and enables us to further delineate and develop our substantial acreage in this area.”
The wells developed under the agreement will be operated by SandRidge.
The agreement will allow the company to enhance its net asset value by expediting delineation of NW STACK, with the opportunity to add proved and undeveloped reserves.
In addition, it is expected to improve the company’s rate of return while reducing capital expenditure requirements by 7% through carrying structure and improving its portfolio of drilled laterals from the existing 22 to 34.