Continental, SK form JV for U.S. shale development

Continental Resources said that it has formed a joint venture with an SK Group’s unit to jointly develop a significant portion of Continental’s Northwest Cana Woodford natural gas assets.

Primary assets to be developed are in Blaine and Dewey counties, Oklahoma.

Continental sold a 49.9% interest in approximately 44,000 net acres in the highly prospective Northwest Cana area of the Anadarko Woodford Shale play, including interests in 37 producing wells, for total consideration of approximately $360 million. Continental received $90 million at closing, and SK has committed to pay an additional $270 million to carry 50% of Continental’s remaining share of future drilling and completion costs. Continental anticipates no change in its 2014 and 2015 capital expenditures, its production mix of crude oil and natural gas, or its overall production targets as a result of this agreement.

Continental and SK have entered into a joint development agreement (JDA) under which Continental has five years to utilize the carry, subject to extension under certain circumstances. The JDA also establishes an area of mutual interest (AMI) in Northwest Cana and certain incentives for the joint venture to expand its leasehold position. Continental will be the operator for all current and future wells that are operated by the joint venture. The company plans to commence drilling in the AMI during November 2014, with four operated rigs running by the end of the year.

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Press Release; Image: SK E&S