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Jeff Beach and Amy Dalrymple, Forum Communications, Published September 20 2012

Exxon spends $1.6 billion on Bakken oil field

Exxon Mobil is making a $1.6 billion investment in the Bakken oil fields.

The corporation is acquiring the rights for oil and gas development on 196,000 acres, almost all of it in North Dakota.

Exxon Mobil and its subsidiary, XTO Energy, is making the purchase from Denbury Onshore LLC, a subsidiary of Denbury Resources Inc. The sale includes all of Denbury’s assets in the Bakken region.

The companies announced the deal Thursday. The agreement increases ExxonMobil’s holdings in the Bakken region by about 50 percent to nearly 600,000 acres.

Dennis Blank, publisher of the Oil Patch Hotline, said the sale is part of an ongoing trend. Because leases in the Bakken are already bought up, making a purchase is the only way to gain or increase a company’s position, Blank said.

“They have to buy into the Bakken to get into the Bakken,” said Blank, who published the Williston-based Oil Patch Hotline from 1979 to 1985 and again since 2006.

Ernesto Allegria, manager of investor relations for Denbury, said that company has been operating about 100 wells in the area, with another 300 wells operated by Denbury partners.

Allegria said the company estimates the property has the potential to produce about 300 million barrels of oil or equivalent hydrocarbons, of which 100 million barrels already have been pumped.

“The Bakken is still pretty early in development stages,” Allegria said. “There is upside potential.”

Only 12 of the 190,000 acres are in Montana, with the rest in North Dakota. Most of the acres are south and west of the Missouri River, with the biggest concentration in McKenzie County.

Denbury will receive $1.6 billion in cash and acquire ExxonMobil’s interests in two oil fields in Wyoming and Texas.

The deal takes Texas-based Denbury out of the Bakken. The company’s primary focus is on using carbon dioxide injection to extend the life of older oil wells.

Exxon Mobil Corp. is the world’s largest publicly traded international oil and gas company. Spokespersons for Exxon and XTO would not comment on plans for operations.

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