PostRock Energy Corp. is buying about 22,000 net acres of leasehold in Pottawatomie, Cleveland and McCain counties in central Oklahoma for $3 million in cash and $7 million of its common stock. The company is targeting multiple reservoirs, the most significant of which is the Woodford Shale.
About 9,000 of the 22,000 net acres are held by production, which is about 50 net boe/d from a variety of formations. Producing depths range from 3,000-6,000 feet. Closing is expected within 30 days, with an effective date of July 1, 2013. The seller was not disclosed.
"This transaction is an important step in our effort to add oil reserves and development opportunities in central Oklahoma," said PostRock CEO Terry W. Carter. "The acquisition brings our leasehold position in this area to more than 34,000 net acres. It adds production, proved reserves and meaningful upside potential from historically productive reservoirs as well as significant upside potential from the Woodford."
Oklahoma City-based PostRock estimates that the net proved reserves being acquired total 574,000 boe, of which 95% is oil and 60% is classified as developed. On that basis, acquisition cost equates to $17.00/boe of proved reserves. PostRock said it believes that there is "significant potential" to develop additional reserves in multiple reservoirs. The most significant is the Woodford, a formation that is believed to range 200-300 feet in thickness at depths of 4,500-6,500 feet across the entirety of the acreage, the company said.
"With this acquisition, we believe we could have as many as 200 potential drilling locations with exposure to more than 10 million boe of recoverable reserves," Carter said.