Marketed: Permian/Central Basin Platform Position, Elk River Resources

Elk River Resources LLC is offering assets in the Permian’s Central Basin Platform in West Texas through a sales process being overseen by BMO Capital Markets.

Elk River is exiting the area through an offer of about 13,940 net Permian acres in Andrews and Cochran counties, Texas. Drilling targets include the San Andres and other shallow oil formations. The position is de-risked through offset well control, according to BMO.

Highlights:

Andrews Package

  • About 9,290 net acres (majority 100% working interest) in Andrews;
    • Offsets strong well results by Apache Corp. (NYSE: APA), BMO said;
    • Elk River is preparing to spud two horizontal wells in 2017;
  • Development in multiple reservoirs including the San Andres, Clear Fork and Wichita-Albany;
    • Roughly 125 locations in development plan;
      • Cash flow positive beginning in 2019;
      • Low drilling and completion costs of $2.8 million for a 7,500-ft lateral Wichita-Albany well;
    • Additional upside in the deeper Devonian, Ellenberger and Woodford formations;
  • Current net production of about 165 barrels of oil equivalent per day (March), 79% oil;
  • Initial infrastructure in place with limited additional build required; and
    • Current water production disposed of in Elk River owned saltwater disposal well.

Cochran Package

  • About 4,650 net acres (6,200 gross) in southern Cochran surrounded by prolific legacy fields, BMO said;
    • About 75% of acreage can be held with a one-rig program;
  • Position adjacent to active development by Steward Energy LLC, Element Petroleum LP, Windy Cove Energy LLC and Custer & Wright Operating Inc.; and
  • High working interest (75%) and contiguous footprint provide operational control for efficient development with existing joint operating agreement in place.

Data rooms will be open until early August. Bid instructions will be provided to participants prior to the bid date. For information visit datarooms.bmo.com or contact Howard Barnwell, BMO director and transaction manager, at 713-546-9767.