Newfield Exploration Co. (NFX)

[OilStockReport]

Good and getting better. What do you think the rest of the year looks like?

Newfield in $308m Uinta asset buy

Oil and natural gas producer Newfield Exploration will raise its acreage in the oil-heavy Uinta basin of Utah by more than a third by buying assets of Harvest Natural Resources and an unnamed private company for about $308 million.

News wires 23 March 2011 23:02 GMT

Houston-based Newfield plans to spend nearly its entire 2011 budget of $1.7 billion to develop its oil and liquids-rich gas plays.

The Uinta deal adds 70,000 net acres to Newfield's nearly 183,000 acres in the basin. The bought acreage is largely undeveloped and is located near the company's largest oil asset, the Monument Butte field.

Wells Fargo Securities analyst David Tameron told Reuters: "(It) makes sense for Newfield to extend its position at one of its highest rate of return assets."

Analysts at Wells Fargo, Tudor Pickering Holt, Global Hunter Securities and Raymond James pegged the per-acre price at about $4500.

This compares with about $13,000 to $16,000 per acre that Korea National Oil will pay Anadarko Petroleum for a stake in the US company's properties in the Eagle Ford Shale – another oil-rich play.

Newfield said last month it expects the Monument Butte field to grow more than 15% this year and domestic oil volumes to rise by about half.

"The acreage value is likely a positive read-through for Bill Barrett and Berry Petroleum's Uinta oil projects. The companies are targeting the same oil-producing formations directly west of Newfield acquired acreage," Tameron said.

The deal, likely to close in May, will be financed through Newfield's revolving credit facility.

Separately, Houston-based Harvest Natural said the sale of all of its oil and gas assets in the Uinta Basin will fetch it $215 million in cash. The sale, effective 1 March, consists of nearly 47,600 net acres.

The sale of Harvest Natural's 70% working interest in the Uinta properties is a part of the Venezuela-focused firm's strategic alternatives process. It plans to use the proceeds to repay debt.

"Proceeds from the transaction will allow Harvest Natural to pay down debt as well as complete

its drilling programmes in both Indonesia and Gabon while allowing the company to continue to evaluate strategic.