QEP Resources Inc.’s (NYSE: QEP) exit from the Sooner State might be coming to a close.

After selling Oklahoma assets in 2014, QEP is in the process of clearing away its remaining assets in upcoming auctions with EnergyNet.

The company has instead turned its focus largely to the Permian and Williston basins. QEP acquired properties in the Williston Basin in late 2012, and in the Permian Basin in early 2014. To help pay for its acquisition costs and to reduce debt, QEP decided to sell properties in Oklahoma, New Mexico and Wyoming.

The assets for sale consist of non-producing minerals, non-participating royalty interest and HBP leasehold acreage in several counties located in the central, northern and eastern parts of the state. QEP is selling roughly 3,830 mineral interest acres in two packages.

In June 2014, QEP sold its Cana Woodford Shale and Granite Wash assets for a combined price of approximately $700 million. In December 2014, QEP also sold interests in noncore properties in southern Oklahoma for an aggregate price of roughly $100 million, according to SEC filings.

Brent Rockwood, communications director, QEP, said that while the assets performed well, some fell short of company’s criteria:

  • Contiguous acreage;
  • QEP operated; and
  • Have a high working interest.

Since then the company has continued marketing its remaining Midcontinent assets, primarily in the Scoop and other Arkoma and Anadarko Basin assets, with current aggregate net production of about 21 million cubic feet equivalent per day (MMcfe/d).

QEP's capital allocation to the Midcontinent/Scoop has since plunged and the company has not filed a drilling permit in Oklahoma since at least Dec. 2, 2014, according to the Oklahoma Department of Environmental Quality.

The dramatic decline in the price of oil and gas in late 2014 and into 2015 also led QEP to restructure its workforce. In July, QEP announced the closing of its regional office in Tulsa, Okla., which represented about 10% of its workforce. The Tulsa regional office managed QEP’s operations in the Haynesville and Permian as well as QEP’s remaining operations in Oklahoma. QEP moved administration of those operations to its Denver headquarters.

The company decided to have all assets and technical teams under one roof in Denver, Rockwood said.

“There was also a cost savings component,” he said. “In this environment of much lower oil and gas prices, companies such as QEP are aggressively pursuing efficiencies.”

Upcoming Offers

Eastern Shelf Package

QEP is selling a multiple-well package in several Oklahoma counties consisting of non-producing minerals, non-participating royalty interest and HBP leasehold acreage.

In one package, QEP assets are located in the Oklahoma counties of Craig, Creek, Delaware, Mayes, Muskogee, Nowata, Okmulgee, Rogers, Sequoyah, Tulsa, Wagoner and Washington.

The properties have an average net income of $9,847 per month for an eight-month period. Six-month average 8/8ths production is 135 barrels per day (bbl/d) of oil and 171 Mcf/d of gas.

Operators include XTO Energy Inc., Tidewater Operating Co. Inc. and Mid-Con Energy Operating Inc.

Breakdown:

  • 24 properties located in Creek, Okmulgee, Sequoyah and Tulsa counties;
    • 22 producing properties, one non-producing property and one temporarily abandoned property;
      • 0.494769-18.75% royalty interest in 21 of the properties;
      • 1.19629-7.86134% overriding royalty interest in three of the properties;
  • Non-producing minerals;
    • About 10,101 gross (2,318.1627 net) acres located in 12 counties in Oklahoma;
  • Non-participating royalty interest;
  • Undeveloped HBP leasehold;
    • 100% gross working interest and 76.5625% net revenue interest in two tracts located in Okmulgee County; and
    • 12.5% gross working interest and 10.9375% net revenue interest in one tract located in Sequoyah County.

Hunter Package

QEP is also selling a multiple well package in central Oklahoma counties, consisting of non-producing minerals, non-participating royalty interest and HBP leasehold acreage.

Oklahoma counties include Lincoln, Oklahoma and Pottawatomie.

The properties have an average net income of $2,807 per month for an 11-month period. Six-month average 8/8ths production is 390 bbl/d of oil and 2,712 Mcf/d of gas.

Operators include Stephens & Johnson Operating Co., New Dominion LLC and Special Energy Corp.

Breakdown:

  • 87 properties located in Lincoln, Oklahoma and Pottawatomie counties;
    • 69 producing properties and 18 non-producing properties;
      • 0.00241-18.75% royalty interest in 81 of the properties;
      • 0.1875-3.18281% overriding royalty interest in six of the properties;
  • Non-producing minerals;
    • About 25,386 gross (1,519 net) acres located in three counties in Oklahoma;
  • Non-participating royalty interest;
  • Undeveloped leasehold acreage; and
    • 0.331875% gross working interest and 0.29039% net revenue interest in one tract located in Pottawatomie County.

Bidding for both packages opens on Dec. 3, and closes on Dec. 10. For due diligence information visit energynet.com or contact Ryan P. Dobbs, business development manager for EnergyNet, at 720-459-2072.

Emily Moser can be reached at emoser@hartnergy.com, and Darren Barbee can be reached at dbarbee@hartenergy.com.