Hess Corp. is selling off some of its Bakken Shale acreage in North Dakota to Calgary-based Enerplus Corp. for $312 million.

Bakken Hess

The deal, set to be completed in May, includes the Little Knife and Murphy Creek acreage. The Hess assets are spread across 78,700 acres in the southernmost portion of its Bakken position.

Total net production from Little Knife and Murphy Creek during 1Q2021 averaged 4,500 boe/d.

“These assets are a strong strategic and operational fit for Enerplus, further extending our high-return Bakken drilling inventory,” said CEO Ian C. Dundas.

CEO John Hess noted that the New York City-based independent still views the Bakken as key to its strategy over the long term.

“The Bakken is a core asset in our company’s portfolio,” Hess said. “Sale of the Little Knife and Murphy Creek acreage, the majority of which we were not planning to drill before 2026, brings material value forward and further strengthens our cash and liquidity position.”

Hess executives in January said the Bakken would continue to drive significant cash flow for about 10 more years. Hess is planning to bring 45 wells online in North Dakota this year.

The assets being sold were not yet connected to the Hess midstream infrastructure, management noted. 

For Enerplus, the deal is its second big purchase in the Williston Basin since the start of the year.  In January Enerplus agreed to pay $465 million to combine with Houston-based Bruin E&P HoldCo LLC.

In connection with the Hess acquisition, Enerplus has increased its 2021 production guidance to 111,000-115,000 boe/d from a prior forecast of 103,500-108,500 boe/d. The guidance includes 68,500-71,500 b/d of liquids, up about 4,000 b/d.

“The increased production guidance was also driven by strong operating performance in North Dakota and higher than expected production” in the Marcellus Shale through the first three months of the year, management noted.

Capital spending in 2021 was revised higher to $360-400 million from $335-385 million.

Enerplus said its 2021 Bakken oil price differential outlook is unchanged at $3.25/bbl below West Texas Intermediate (WTI), “which assumes the Dakota Access Pipeline (DAPL) continues to operate.”
DAPL, which moves Bakken oil to market, has seen its continued operations suffer legal setbacks of late. In late January the U.S. Court of Appeals for the District of Columbia (DC) Circuit upheld a ruling that had vacated a key federal operating permit. 

The DC court was planning to hold a status conference about DAPL on Friday (April 9) to determine whether the pipeline may continue to operate.

“In the event DAPL is required to cease operations, Enerplus expects sufficient rail egress to be available, however, Bakken oil price differentials would be expected to widen reflecting rail economics,” management noted.

If the Bakken  system were to cease operating, Enerplus estimated it would result in a realized 2021 differential of $6.00/bbl below WTI, assuming eight months of wider differentials. The impact to the corporate netback in that scenario was estimated at around 90 cents/boe.