CASPER — Wyoming’s oil and gas firms, recently strapped by the sudden downturn in the price of crude, are operating in a better price environment this year. For some, that means selling Cowboy State assets and focusing elsewhere. For others, it means buying local and expanding at home.
SM Energy Company, a Denver-based oil and gas firm, announced recently that it was selling about 80 percent of its Powder River Basin acreage to focus on opportunities in Texas.
The sale of 112,000 net acres in Converse, Johnson and Campbell counties will bring the firm $500 million, subject to closing cost adjustments.
The buyer is not mentioned in SM Energy’s press release on the agreement.
The SM assets produced about 51 percent oil, 18 percent natural gas liquids and 31 percent natural gas, as of December 2017 production, according to the company.
Other firms in Wyoming have also expanded operations, or let go of assets, in key areas in recent months.
QEP Resources has continued to let go of its Wyoming position, including the sale of more than 100 wells in the gas fields of the southwest of the state to Hilcorp Energy in December. Hilcorp, a Houston-based firm, acquired 1,379 wells from Anadarko on Dec. 4, also in the western gas fields.
Meanwhile, a firm that emerged from bankruptcy last spring, Samson Resources II, is focusing more exclusively on the Powder River Basin. It announced a sale agreement in mid-December to unload $34 million worth of Wamsutter assets to an undisclosed buyer.
The cash from the Wamsutter divestment will fund the Tulsa-based company’s drilling plan for the coming year, which will focus on the Green River and Powder River basins.
Wyoming continues to face a budget deficit due to the gap in revenue during the slide in crude prices, which caused a slate of bankruptcies and diminished drilling activities in the state. However, the increase in oil and gas activity has already handed state budget planners a number of surprises, including a recent boost of $140 million over the next two years due to better oil prices, announced in a state revenue update Monday.
Though Wyoming operators are facing lower prices than boom years, applications to drill for oil and gas shot up throughout 2017. Oil and gas lease sales in Wyoming, where firms shore up acres for future drilling, have also experienced a boost this year.
State revenue from leasing to drill increased by 800 percent in 2017 compared to the previous year.