One week after executives at MDU Resources Group Inc. said the company was looking to drill for oil and natural gas in a third play, their exploration and production (E&P) unit, Fidelity Exploration & Production Co., had agreed to purchase working interests (WI) and a leasehold in Wyoming's Powder River Basin.

MDU executives said Wednesday Fidelity would acquire oil and gas properties in Converse County, WY, including primarily undeveloped mineral leasehold positions on about 41,000 gross (23,700 net) acres. The acquisition is expected to be accretive to 2014 earnings per share. The Bismarck, ND-based company did not disclose the sales price nor the sellers.

During an earnings conference call last week, MDU executives said the company's strategy was to continue its focus on oil targets -- and, simultaneously, to de-emphasize gas drilling -- in the Bakken Shale in North Dakota and the Paradox Basin in Utah (see Shale Daily, Feb. 4). They added that Fidelity was looking to expand its operations into a third, unspecified play.

"Our oil and gas company has been seeking another world-class oil resource to complement our established core assets in the Bakken in North Dakota and the Paradox Basin in Utah," said CEO David Goodin. "The Powder River Basin is an area we know very well, and we have the geographic, technical and regulatory expertise to make this a long-lived production base."

The acquisition includes a WI in an unspecified number of producing wells and an ongoing two-rig development drilling program targeting the basin's Frontier zone, although the acreage is prospective to several other zones as well. Current net production is more than 1,100 boe/d, 80% weighted toward oil, with additional production expected online before closing.

The transaction is set to close by April 1, with an effective date of Oct. 1, 2013. The deal is subject to customary closing conditions, including a due diligence process and environmental reviews.

MDU plans to invest $440 million on overall E&P activity in 2014. The company holds about 125,000 net acres in the Bakken, with properties in North Dakota's Mountrail and Stark counties and Richland County, MT. It also has 130,000 net acres in the Paradox, including 35,000 net acres acquired recently, with an option to earn another 20,000 acres.