Page 7 - NorthAmOil Week 26 2022

NorthAmOil INVESTMENT NorthAmOil

Sitio buys Permian assets from Foundation

PERMIAN BASIN SITIO Royalties Corp. this week announced acreage position with the acquisition of more
that it has completed the acquisition of around than 100,000 NRAs (405,000 square km). It now
31,900 net royalty acres (NRAs, 129 square km) has a total acreage of more than 173,000 NRAs
in the Permian Basin while agreeing derivative (688 square km), providing investors with “expo-
contracts to provide cash flow security. sure to a diversified set of high-quality and active
The acquisition is comprised of two deals. operators, including Coterra Energy, Colgate
The first saw it pick up more than 19,700 NRAs Energy, ConocoPhillips, Devon Energy, Exxon-
(80 square km) from Midland-based Founda- Mobil, Occidental Petroleum and Pioneer Natu-
tion Minerals, a portfolio company of Quan- ral Resources,” it said.
tum Energy Partners, for around $323mn. The deals are expected to add 15% per share
The second comprises a “definitive purchase to the company’s 2H2022 dividend payout.
and sale agreement” for more than 12,000 Sitio CEO Chris Conoscenti described the
NRAs (49 square km) for around $224mn acquisitions as “highly accretive” and noted
from Houston-based Momentum Minerals, the company’s “continued execution of our
which is a portfolio of funds and accounts man- returns-focused, large-scale mineral and royalty
aged or advised by affiliates of Apollo Global consolidation strategy”.
Management. Meanwhile, the company’s chairman, Noam
Sitio said that it had funded the Foundation Lockshin, added: “The acquired assets are in
deal by leveraging a credit facility and proceeds highly valued areas of the Permian Basin, mean-
from a 364-day unsecured bridge loan, while the ingfully increasing our line of sight to strong pro-
Momentum purchase “is expected to be funded duction growth in the near term and providing
utilising debt financing and close in the third substantial remaining inventory.”
quarter of 2022”. While announcing the acreage expansion,
The deals mark the company’s fourth and Sitio said it has also signed crude oil and natural
fifth acquisitions covering at least 10,000 NRAs gas derivative contracts “to enhance the certainty
(40 square km) that have been completed or of cash flows and protect against adverse com-
signed in the last 12 months, tripling Sitio’s modity price fluctuations”.™

PERFORMANCE

Hibernia receives major resource boost

NEWFOUNDLAND CANADA’S offshore Hibernia oilfield could 136.8mn barrels have been produced.
AND LABRADOR contain nearly 346mn barrels more than previ- CNLOPB said its findings were “based on
ously thought, according to a new resource esti- data acquired from drilling and production
mate by the local regulator. activities along with an updated, long-term drill
Last week, the Canada-Newfoundland & schedule.”
Labrador Offshore Petroleum Board (CNLOPB) The field is located on the north-eastern
released its latest report on the field’s estimated Grand Banks, around 315 km from St. John’s,
ultimate recovery (EUR), suggesting that proven Newfoundland, in the Jeanne d’Arc Basin. It
and probable (2P) reserves amount to 1.812bn was discovered in 1979 by US firm Chevron and
barrels, 168mn more than the 1.644bn barrels following the drilling of nine additional wells
estimated in 2014. The report said the EUR to delineate the discovery, it entered produc-
could be further expanded by 178mn barrels to tion from the Hibernia gravity base structure
almost 2bn barrels (3P) when including possible platform in 1997. The facility has a production
reserves. capacity of 220,000 barrels per day (bpd).
The latest figure includes the 1.22bn bar- The field is operated by the Hibernia Man-
rels produced from the field as of April 30 this agement & Development Co. (HMDC), led by
year, while the field also contains contingent American super-major ExxonMobil and has
gas resources in excess of 2.5 trillion cubic produced at an average rate of 134,000 bpd over
feet (71bn cubic metres) and 53mn barrels its 25-year life to date.
of NGLs. The Hibernia data also includes ExxonMobil (33.125%) is joined in HMDC
reserves assigned to the Ben Nevis – Avalon by Chevron (26.825%), Suncor Energy (20%),
and Catalina reservoirs, which have com- Canada Hibernia Holding Corp. (CHHC, 8.5%),
bined 3P reserves of 550mn barrels, of which Murphy Oil (6.5%) and Equinor Canada (5%).™

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