The Calgary-based company said it would purchase the non-operated 1.45% equity from a private US-based company for about C$ (US$12.5 million). The acquisition covers about 89 square kilometres in the Denver-Julesburg basin in Weld County, Colorado.
Jointly operated by Anadarko Petroleum and Noble Energy, the Wattenburg project is currently subject to a large-scale horizontal development well and multi-stage fracture stimulation programme.
Shoreline said the operators had this year planned to invest more than US$2.5 billion in the acreage to target light oil in the Niobarra and Codell formations. They anticipated the Wattenburg field could recover as much as 300,000 to 600,000 barrels of oil equivalent per well.
Shoreline chief executive Trevor Folk said in a statement that the acquired asset would provide the highest return of any project the company had evaluated in Canada and the US.
“Being in a non-operated royalty position allows Shoreline to harvest passive income from a world class oil project, a project which continues to see accelerated drilling and continual upward revisions in production and reserves per well, making these assets a perfect fit for Shoreline’’s mandate as a dividend paying, oil and gas production company,” he added.
Folk also said the company would come closer to its goal of a balanced commodity portfolio of 50% liquids and 50% natural gas, with the vast majority of the wells producing very light sweet crude oil.
Based on the current development practices of Anadarko and Noble, Shoreline estimated that there were between 400 and 700 potential drilling locations on the acreage. It also deduced that netbacks from its royalty position could average between US$75 and US$80 per barrel for 2013 (based on current forward strip commodity pricing).
Shoreline said the operators had received permits and scheduled drilling in nearly 60 locations for the first six months of 2013.