ConocoPhillips Announces Agreement to Acquire Liquids-Rich Montney Acreage from Kelt Exploration Ltd.
July 22 2020 - 4:30PM
Business Wire
ConocoPhillips (NYSE: COP) today announced it has signed a
definitive agreement to acquire additional Montney acreage in
Canada from Kelt Exploration Ltd. for cash consideration of
approximately $375 million before customary adjustments, plus the
assumption of approximately $30 million in financing obligations
for associated partially owned infrastructure.
This acquisition is 140,000 net acres in the liquids-rich
Inga-Fireweed asset Montney zone, which is directly adjacent to the
company’s existing Montney position. The transaction increases the
company’s Montney acreage position to 295,000 net acres with 100
percent working interest. Key attributes for the transaction
include:
- Adds over 1 billion barrels of oil equivalent (BBOE) of
high-value resource with an all-in cost of supply of mid-$30s (WTI
basis).
- The acquisition cost is approximately $2-$4 per barrel on a WTI
cost of supply basis, depending on pace of development.
- Increases exposure to the core of the liquids-rich Montney
acreage.
- Production associated with the acquired asset is approximately
15 thousand barrels of oil equivalent per day (MBOED).
- Adds over 1,000 high-quality well locations.
- Increases scale, which will drive supply chain and offtake
improvements.
- Transaction economics do not assume any incremental capital
investments are made in the Montney in the next several years.
- The transaction is subject to regulatory approval and is
expected to close in the third quarter of 2020. The effective date
for the transaction is July 1, 2020.
“We have tracked and analyzed this adjacent acreage position for
a long time,” said Matt Fox, executive vice president and chief
operating officer. “It represents a high-value extension of our
existing Montney position, and we’re pleased to capture this
opportunity at an attractive cost of supply that meets our criteria
for resource additions. The transaction provides operating scale
and flexibility to create significant value for shareholders by
applying our drilling and completion techniques on this asset and
optimizing our future overall Montney development plans.”
Separately, the company announced that it initiated production
from its Montney development in the first quarter of 2020.
Production continues to ramp up from the company’s first multi-well
pad.
Fox continued, “Our current Montney development is performing
according to our projections and plans. We’re still in the process
of bringing our initial wells online, and early results are
encouraging: we have confirmed the liquids-rich nature of the play
and also confirmed that transferring the drilling and completion
techniques we’re employing in the U.S. Big 3 can add significant
rate and recovery potential to the play. We view the Montney as a
very attractive long-term asset and today’s announcement gives us
significant running room at a very attractive all-in cost.”
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About ConocoPhillips
Headquartered in Houston, Texas, ConocoPhillips had operations
and activities in 17 countries, $65 billion of total assets, and
approximately 10,400 employees as of March 31, 2020. Production
excluding Libya averaged 1,278 MBOED for the three months ended
March 31, 2020, and proved reserves were 5.3 BBOE as of Dec. 31,
2019. For more information, go to www.conocophillips.com.
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generally as set forth in our filings with the Securities and
Exchange Commission. Unless legally required, ConocoPhillips
expressly disclaims any obligation to update any forward-looking
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or otherwise.
Cautionary Note to U.S. Investors – The SEC permits oil
and gas companies, in their filings with the SEC, to disclose only
proved, probable and possible reserves. We may use the term
"resource" in this news release that the SEC’s guidelines prohibit
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Use of Non-GAAP Financial Information and Other Terms –
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Media Relations John Roper 281-293-1451
media@conocophillips.com
Investor Relations 281-293-5000
investor.relations@conocophillips.com
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