Riviera Resources Inc. has agreed to sell its interest in properties in the Hugoton Basin of southwestern Kansas, its largest producing asset, to an undisclosed buyer for $31 million.
The properties include about 2,300 nonoperated wells with proved developed reserves of about 74 Bcfe. Production would continue to be processed at the company's Jayhawk natural gas processing plant in Ulysses, KS. The sale is expected to close in 2Q2019.
"Use of proceeds will be determined by board and management, which may include share repurchases under the company’s previously announced share repurchase program, share tenders, and/or reinvestment in higher return projects at Blue Mountain or in the upstream business," Riviera said of the Hugoton deal.
The Houston-based independent also said subsidiary Blue Mountain Midstream LLC has finalized an agreement with an undisclosed third party to dedicate acreage in the Merge prospect in Oklahoma to its natural gas gathering and processing system.
Under the dedication agreement with Blue Mountain, the undisclosed third party would become a customer for gas gathering and processing services. The dedicated acreage is in Oklahoma's Canadian, Grady, and McClain counties. "The agreement provides a long-term acreage dedication with the potential for incremental volumes as drilling activity advances within the dedicated acreage footprint," Riviera said.
Riviera became an independent following its spinoff from Linn Energy Inc. last year. Besides the Hugoton, Riviera's portfolio includes assets in the Drunkards Wash Field in Utah's Uinta Basin, as well as assets in Michigan, Illinois, East Texas and North Louisiana. It also holds assets in the northwest part of Oklahoma's Sooner Trend of the Anadarko Basin, mostly in Canadian and Kingfisher counties, aka the STACK. The 1Q2019 earnings call is scheduled on May 9.