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SK Innovation to acquire Oklahoma shale assets

South Korean energy giant SK Innovation has signed an agreement to acquire a US oil and gas explorer to expand its overseas business, the company said on March 21.

The contract to acquire a 100 percent stake in Longfellow Nemaha will be delivered by its US subsidiary, SK E&P America, in the second quarter.

Longfellow Energy, LP is a privately owned oil and natural gas exploration and production company, that engages primarily in the exploration and development of new reserves in onshore US basins that have been underdeveloped or overlooked.

Longfellow Energy was founded in 2006 by Malone Mitchell, 3rd, and is based out of Addison, Texas.

The announcement came a day after SK Innovation said it plans to invest 485.3 billion won ($453.1 million) in its US subsidiary. The investment appears to be going largely toward acquiring Longfellow. The sale price of Longfellow has not been disclosed, but SK is likely to spend around 300 billion won, according to industry insiders.

Beginning operations in 2007, Longfellow first successfully developed the McGee Valley Project, a tight gas reservoir in Southeast Oklahoma. It’s geologic setting (the Ouachita Overthrust) is similar to the huge Pinon Field that Riata developed in the West Texas Overthrust.

Most recently, Longfellow has focused on the Nemaha Project in the STACK Play area of Central Oklahoma. Longfellow began putting the project together in 2011. Viking Drilling, which is owned by the Mitchell family, upgraded its rig fleet to drill horizontal wells quickly and efficiently. Longfellow now controls about 80,000 net acres and operations in about 125 sections. Through May of 2017 Longfellow, with Viking Drilling rigs, has drilled more than 90 wells.

The transaction will represent a significant expansion of SK’s core focus area in the US midcontinent region, the company said.

“SK initially invested in the growing US oil and gas upstream market in 2014, and through this platform, we continue to build a balanced portfolio of conventional and unconventional assets,” said Kim Tae-won, president of SK E&P America.

Compiled and Published by GIB KNIGHT

Gib Knight is a private oil and gas investor and consultant, providing clients advanced analytics and building innovative visual business intelligence solutions to visualize the results, across a broad spectrum of regulatory filings and production data in Oklahoma and Texas. He is the founder of OklahomaMinerals.com, an online resource designed for mineral owners in Oklahoma.

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