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Non-Operator Oil and Gas Companies a Growing TrendNOTE TO EDITORS: The Following Is a Research Alert Issued by Century Market Research. (October 18, 2011)
NEW YORK, NY -- (Marketwire) -- 10/18/11 -- The non-operator model for oil and gas companies has been around for awhile now, but as these companies look to lower costs, having a non-operator portfolio of property appears to be a way to open up new areas while minimizing the risks associated with exploration and production.
An August 2010 article written by Credit Suisse titled "The State of the Bakken" (www.bit.ly/orTmjK) points out Northern Oil and Gas (NOG) as having 122,000 net acres in the Bakken Formation, but not nearly as many employees as its competitors, and zero operating rigs. By being a non-operator, companies like NOG take a minority position. The operator has control of the well but must absorb more of the costs. The non-operator only has to pay for its percentage of drilling costs, development and operating cost of the wells.
Oil and gas exploration companies are looking to expand their "non-op" portfolios. Stone Energy (SGY), a $900m producer, is expanding into non-op areas of the business to gather intelligence on new areas without the tremendous costs associated with owning and operating a new site. Rex Energy (REXX) is also said to be expanding its non-operator portfolio.
Other companies like Cross Border Resources (OTCQX: XBOR) operate almost entirely in the "non-op" role. The company recently announced an increase of 60% to its PV-10, bringing that number up to $28 million.
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