Continental Resources receives minerals subsidiary investment
Continental Resources Inc. has created a minerals subsidiary and agreed to sell a stake in the new venture to Toronto-based royalty company FrancoNevada for $220 million, the companies said Monday.
Franco-Nevada’s contribution is expected to cover most of Continental’s expenses in setting up the royalty subsidiary. Continental will receive between 25 percent and 50 percent of the subsidiary’s revenues based on performance targets, the companies said.
“We could not be more pleased to team up with a leading royalty corporation in Franco-Nevada, who has a vast understanding of the value of mineral ownership as evidenced by their long track-record of acquiring assets globally,” Continental Resources CEO Harold Hamm said in a statement.
“We are pleased to announce yet another growth vehicle to Continental within our core business, complementing our existing assets and capturing incremental value for Continental shareholders while also applying proceeds for further debt reduction.”
The deal is expected to close in the fourth quarter.
Continental and FrancoNevada have agreed to spend up to a combined $125 million per year for the next three years to buy mineral rights in Oklahoma’s SCOOP and STACK plays. “Collaborating with Continental to purchase minerals is a new business development opportunity for Franco-Nevada,” Franco-Nevada CEO David Harquail said in a statement. “We are pleased to be able to work with this best-in-class operator to further strengthen FrancoNevada’s overall portfolio.”
Continental Resources is scheduled to release its second-quarter financial and operational report Tuesday.
We could not be more pleased to team up with a leading royalty corporation in Franco-Nevada, who has a vast understanding of the value of mineral ownership as evidenced by their long trackrecord of acquiring assets globally.”
Continental Resources CEO Harold Hamm