Houston's Newfield Exploration Co. has signed two separate agreements totaling $308 million that will add about 70,000 net acres to its unconventional oil and gas holdings in Utah's Uinta Basin.

The latest acquisition "is largely undeveloped and located adjacent and north of the company's largest oil asset -- the Monument Butte field," Newfield said. The unconventional oil-weighted play holds "deep gas potential." Newfield, which operates the field, has a working interest of about 85%, and acreage is "substantially" held by production.

Most of the Uinta Basin property is being acquired from Houston-based Harvest Natural Resources Inc. for $215 million; the other purchase is being completed with an undisclosed seller.

Harvest is selling 69,000 gross acres (47,600 net) in the Antelope project area of the basin, which includes wells operated jointly by the company and Newfield. Harvest owns a 70% working interest in the wells. The transaction, said Harvest, is part of its ongoing process to explore "strategic alternatives," which it announced last September.

By itself, the Harvest leasehold cost Newfield about $4,400/acre, according to Canaccord Genuity energy analysts. "We are big fans of the company's Uinta Basin assets," they said, but they view the announcement as "neutral" until they better understand Newfield's development plan for the newly acquired acreage.

"We assume the target interval of this acreage is the tertiary-age Green River formation," said the analysts. "For reference, Green River wells in the Monument Butte field recover 70,000 boe/d (primary/secondary recovery) for a drill/complete cost of $800,000."

Tudor, Pickering & Holt Co. Securities Inc. (TPH) analysts estimated the total price for the combined purchases at $4,500/acre. The purchase is a "positive" because it increases Newfield's position in "higher-return oily assets," the analysts said. According to TPH, Newfield is running a five-rig program this year in Monument Butte, with a focus on 20- and 40-acre infill drilling.

The Monument Butte field accounted for about one-fifth of Newfield's year-end 2009 proved reserves; it now has about 1,300 producing wells there. Prior to the latest news, Newfield held about 180,000 net acres in the field, which included 63,000 net acres added over the past two years through several transactions with Ute Energy LLC.

Newfield's gross production from the Monument Butte field area grew to a mid-May 2010 rate of more than 20,000 boe/d from 7,500 boe/d in 2004.

Closing of the latest transactions, which Newfield said would be financed with debt, is expected by the end of June. The sale has an effective date of March 1, 2011.