In a “lower for longer” price environment, E&Ps in the Denver-Julesburg’s premier field are taking the longer literally—meaning extending laterals by swapping acreage.
Noble Energy Inc. (NYSE: NBL) and PDC Energy Inc. (NASDAQ: PDCE) said June 16 they entered agreements to exchange certain acreage in the greater Wattenberg area in Weld County, Colo.
Houston-based Noble will receive about 11,700 net acres in its Wells Ranch development area. In exchange, Denver’s PDC Energy will receive about 13,500 net acres elsewhere in the Wattenberg core.
The difference in net acreage exchanged is driven primarily by variances in net revenue interest, according to both companies.
The trade enables the companies to design more comprehensive, long-term development plans, capture operational synergies and streamline marketing and midstream, said Bart Brookman, PDC’s president and CEO.
“Most significantly, the trade increases opportunities for longer horizontal laterals with significantly increased working interests, all while minimizing potential surface impact,” Brookman said in a statement.
PDC said it is currently reviewing the potential effects of the trade on its 2016 development plans.
For Noble, the trade will boost its Wells Ranch acreage position by about 20%, said Charles J. Rimer, senior vice president of Noble’s U.S. operations.
At closing, Noble’s total Wells Ranch development area net acreage will increase to about 78,100 acres.
“The new acreage to Noble Energy materially increases long lateral drilling opportunities within our Wells Ranch development area,” Rimer said in a statement. “Further, the higher contiguous acreage positions for both companies should result in fewer surface locations, reducing the above ground impact.”
The acreage exchange includes leasehold only. Existing production on the acreage will remain with each party.
The transaction is expected to close early fourth-quarter 2016, subject to title examination and other adjustments.
Emily Moser can be reached at emoser@hartenergy.com.
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