Months after Emerald Oil Inc.’s (EOX) Delaware Basin acquisition fell apart, the Denver E&P has entered agreements to sell working interest in the Bakken Shale as well as a possible midstream joint venture, the company said Aug. 3.

Emerald said it entered a purchase and sale agreement in July with Koch Exploration Co. LLC, a subsidiary of Koch Industries Inc., totaling about $24.4 million. Proceeds will be used to repay outstanding borrowings on the company’s revolving line of credit.

Under the agreement, Koch will acquire a 30% working interest in its undeveloped southern drilling spacing units in McKenzie County, N.D., for $16.6 million. Koch Exploration separately agreed to acquire a portion of Emerald's undeveloped leasehold in Richland County, Mont., for $900,000.

Emerald and Koch also entered into a 2016 drilling agreement for two wells in southern McKenzie on two undeveloped drilling spacing units. An area of mutual interest (AMI) has been established as part of the deal so that costs leasehold and acreage acquisitions will be split evenly between the companies.

Koch will reimburse Emerald for their proportionate 30% share of existing authorization of expenditures (AFEs) in southern McKenzie.

“Koch Exploration comprehensively analyzed the technical attributes of the acquired acreage and is excited about working with Emerald's operating team to develop the play,” said John Mueller, president of Koch Exploration.

Emerald has an 87,500 net acre position in the core of the Williston Basin with 670 net potential drilling locations prospective for oil in the Bakken, Three Forks and Pronghorn.

For Emerald, the deal is the first since the company entered into a $75 million agreement to buy interests in Lea and Eddy Counties, N.M., from Yates Petroleum Corp.

After market conditions dulled Emerald’s attempt to raise funds through a stock offering, the company terminated the acquisition, forfeiting $752,000 in the process.

Emerald said it also signed a term sheet to form a midstream joint venture (JV) with two multi-billion-dollar public midstream companies, which it expects to finalize by year-end.

The JV is being formed to build out a multi-commodity gathering system on Emerald's undedicated acreage in southern McKenzie in the Bakken and Three Forks.

Emerald would contribute several existing infrastructure assets into the JV and dedicate about 74,712 net acres in McKenzie. Emerald said it anticipates owning a meaningful percentage of the JV.

McAndrew Rudisill, CEO of Emerald Oil, said the potential midstream JV is a major milestone in the development of Emerald's southern McKenzie acreage.

“After successfully testing two prolific Middle Bakken wells in the JV area, this midstream system will now allow for environmentally compliant long term development planning to begin for the entire JV area,” Rudisill said.

A formal announcement could be made by the end of 2015.

Contact the author, Darren Barbee, at dbarbee@hartenergy.com.