Australian-based Elk Petroleum Ltd., which of late has concentrated its exploration and development in the Rocky Mountains, has secured an estimated $20 million agreement to buy Freeport-McMoRan Inc.’s stakes in Central Wyoming’s natural gas-rich Madden field and the Lost Cabin Gas Plant.

The field and gas plant in the Wind River Basin, in which Freeport holds an estimated 14% working interest, are in Natrona and Fremont counties. ConocoPhillips operates Madden with a 46% stake, Moncrief Oil has 30% interest, and there are some private interest holders. Key to Elk is Madden’s location, which is about 60 miles from the Grieve carbon dioxide (CO2) enhanced oil recovery (EOR) project, in which it is partnering with Denbury Resources Inc.

Production from Madden is transported for processing through the dedicated Lost Cabin plant, which includes three raw gas processing trains with a total installed raw gas processing capacity of 310 MMcf/d. The raw gas stream is comprised of 68% methane and ethane, 20% CO2 and 12% hydrogen sulfide. Currently 240 MMcf/d of raw gas is processed through the gas plant, Elk said.

Since 2013, the Lost Cabin plant also has been equipped to capture, process and deliver for sale most of the CO2 from the Madden raw gas stream. The CO2 is under a long-term supply contract to Denbury, considered a leading EOR expert. From 2013 to 2016, the CO2 from Lost Cabin was Denbury’s principal source for supply for its Bell Creek CO2 EOR project on the Wyoming-Montana border.

In May 2011, Elk signed an agreement with Denbury to jointly operate the Grieve project. Under the agreement, Elk holds a 35% working interest in the Grieve with Denbury, as operator, holding a 65% stake. The project, which began development in 2012, is targeting 12-24 million bbl gross recoverable from the CO2 flood of the field. CO2 and water injection were begun in 2013, with oil production slated to ramp up late this year.

The purchase from Freeport, scheduled to close in February, is not subject to any preemptive rights by the other stakeholders, Elk said. Freeport over the past few months has been selling off its poorly performing U.S. exploration portfolio. With the Wyoming sale, Freeport would have U.S. operations onshore in South Louisiana and on the Gulf of Mexico’s Outer Continental Shelf.

Elk estimated that its portion of free cash flow for 2017 from the purchased assets would be more than $7 million.

The Madden field covers an area of more than 200 square miles/128,000 acres and produces from multiple reservoir units ranging in depth from 5,000-25,000 feet. With estimated original gas in place of more than 5.5 Tcf, the field to date has produced 2.42 Tcf-plus, Elk said. Shallow gas production is from 165 active wells.