Looking to shift its midstream unit to liquids, MDU Resources Group Inc. is buying a stake in a Whiting Oil and Gas Corp. storage and transportation complex in the Bakken.
The $66 million deal will give the Bismarck, N.D.-based MDU Resources a 50 percent interest in Whiting-operated natural gas and oil midstream assets near Belfield, N.D.
Those assets include the new 35 million cubic-foot-per-day Belfield gas processing plant and a gathering pipeline system connected to the plant; a gas residue line connecting into a system operated by the MDU Resources subsidiary Williston Basin Interstate Pipeline Co.; a crude oil gathering system; a 20,000-barrel oil storage terminal scheduled to come online in the third quarter and a pipeline connecting the terminal to the Bridger Pipeline.
More liquids-based
“This transaction is an important step forward in executing our strategy to become more liquids-based in the midstream space,” President and CEO Terry Hildestad said. “As production continues to ramp up and the storage terminal is completed later this year, we will be positioned nicely for the investment to produce accretive earnings and cash flow.”
MDU Resources purchased an interest in the assets through its subsidiary Bitter Creek Pipelines, LLC and will be responsible for 60 percent of some capital expenditures.
The facilities will be supplied by oil and gas production from Whiting’s seven-rig program Pronghorn acreage in Stark and Billings counties the MDU Resources subsidiary Fidelity Exploration & Production Co’s acreage in adjacent Stark County.
MDU Resources operates in the Rocky Mountains and in the Gulf Coast region and produced 29,000 barrels of oil equivalent per day in the first quarter, 36 percent oil. The company is currently running 10 rigs across its assets, including five in the Bakken.
MDU plans to spend 40 percent of its capital budget, or $160 million, in the Bakken this year. The company operates around 124,000 acres in three North Dakota counties.
—Eric Lidji
