Exxon Mobil Corp. will buy Denbury Resources Inc.'s assets in the Bakken shale in North Dakota and Montana for $1.6 billion and in exchange of interests in some other fields to raise its acreage in the oil-rich area by 50 percent.
Assets in Bakken, where output is expected to double to about 1.2 million barrels per day by 2015, are usually cheaper than those in other oil shales as poor infrastructure makes it difficult to transport crude to major markets on the Gulf coast.
And as average drilling and completion costs -- at about $8.5 million per well -- are among the highest in Bakken, companies need deep pockets to wait until new pipelines and other infrastructure come up in the next few years.
Exxon said the properties being bought consist of about 196,000 net acres, with expected production of more than 15,000 oil equivalent barrels per day in the second half of this year.
The acquisition will increase Exxon's holdings in the Bakken region to nearly 600,000 acres.
Denbury said it plans to use part of the proceeds to explore buying oil fields in the Gulf Coast or Rocky Mountain regions.
The company, which will receive Exxon's operating interests in the Webster field in Texas and the Hartzog Draw field in Wyoming, said the assets were close to its existing or planned projects for recovering oil using carbon dioxide.
"We can now focus on what Denbury does best, carbon-dioxide enhanced oil recovery, which we believe offers one of the most compelling rates of return in the oil and gas industry today," Denbury Chief Executive Phil Rykhoek said in a statement.
The deal is expected to close late in the fourth quarter.
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