Unit Corporation announced that its wholly owned subsidiary, Unit Petroleum Company ("Unit Petroleum"), has entered into an agreement to acquire certain oil and natural gas assets from Noble Energy, Inc. that include approximately 84,000 net acres primarily in the Granite Wash, Cleveland, and Marmaton plays in western Oklahoma and the Texas Panhandle, for $617.1 million in cash, subject to certain possible adjustments.
The effective date of this acquisition is April 1, 2012, and closing is anticipated to be in September 2012, subject to customary closing conditions. As of the effective date, the estimated proved reserves of the subject properties is 44 million barrels of oil equivalent (MMBoe) and the estimated average daily net production is 10,000 barrels of oil equivalent (Boe). The acquisition will add approximately 25,000 net acres to Unit Petroleum's Granite Wash core area in the Texas Panhandle with significant resource potential and would include 617 potential horizontal drilling locations. The subject acreage is characterized by high working interest and operatorship, and 95% of the subject acreage is held by production. Unit will also receive two gathering systems as part of the transaction.
"We are pleased to announce this strategic acquisition for Unit," commented Larry D. Pinkston, Unit's President and Chief Executive Officer. "This is an important growth step for Unit and represents a unique opportunity that benefits all three of our business segments. For our upstream business segment, it will more than double our acreage in the Granite Wash Texas Panhandle core area, a highly prolific liquids-rich fairway in the Anadarko Basin. We plan to accelerate the drilling activity in the acquired properties over the next 12 to 18 months using seven rigs from our contract drilling segment, and we plan to operate the acquired gathering systems and, as appropriate, replace existing third party processing contracts beginning in 2015. We anticipate that this acquisition will immediately be accretive to cash flow and to earnings beginning in 2013. It will also provide us with additional inventory of drilling opportunities that will allow us to significantly grow our production in the Anadarko Basin focused on oil- and liquids-rich gas targets. We look forward to accelerating development of these assets and delivering growth to our shareholders over the next several years."
Unit intends to finance the acquisition with long-term debt. In conjunction with the acquisition, Unit intends to increase commitments under its existing credit facility from $250 million ($600 million borrowing base) up to $750 million ($800 million borrowing base). In addition, Unit Petroleum has identified $200 to $300 million of certain upstream assets it is considering selling.