MDU Resources Group, Inc. (NYSE: MDU), through its wholly owned subsidiary, Bitter Creek Pipelines, LLC, announced an agreement purchasing a 50 percent undivided interest in Whiting Oil and Gas Corporation’s natural gas and oil midstream assets near Belfield, N.D. in the Bakken area.
The facilities include a newly constructed, state-of-the-industry natural gas processing plant and a natural gas gathering pipeline system connected to the plant. A natural gas residue line that ties into the Williston Basin Interstate Pipeline Company system (an MDU Resources subsidiary) is also included, along with a crude oil gathering system, a crude oil storage terminal and a crude oil pipeline that connects the terminal to the Bridger Pipeline. Whiting will continue to operate the facilities.
The Belfield natural gas processing plant has an inlet processing capacity of 35 million cubic feet per day. The oil terminal is currently under construction, with completion expected in the third quarter of 2012. It will have a storage capacity of 20,000 barrels of oil.
“This transaction is an important step forward in executing our strategy to become more liquids-based in the midstream space,” said Terry D. Hildestad, president and chief executive officer of MDU Resources. “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.”
Bitter Creek paid $66 million at closing to acquire its interest in the facilities and will be responsible for 60 percent of certain future capital expenditures as specified in the agreement.
“This investment diversifies our operations into midstream gathering and processing of natural gas liquids and crude oil,” said Steven L. Bietz, president and chief executive officer of Bitter Creek. “This complements both our expertise in dry gas gathering, transportation and storage, and our asset base in the Bakken.”