Lario Oil & Gas said it has negotiated a $600 million credit facility with Wells Fargo and others to give it flexibility as it expands in regions where hydraulic fracking has created an oil boom.
In a statement released Monday by its Denver office, Lario said it is seeking to accelerate drilling in west Texas’s Permian Basin, the Bakken area of North Dakota and other areas. Lario president and CEO Mike O’Shaughnessy said in the statement that hydraulic fracturing is unlocking vast resources in those areas.
The company made the announcement public to draw potential deals, said Lario executive vice president and chief financial officer Dave Loger.
Some of that money will find its way to drilling in Kansas, Loger said.
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Although the 87-year-old company is headquartered in Wichita and has drilled in Kansas, Oklahoma and Texas for decades, it had moved its focus outside the region as the amount of oil discovered tapered off. It now has land and operations from Ohio to California, with its biggest presence in the Bakken area of North Dakota and Montana.
But in the past decade, with the arrival of 3-D seismic imaging, Loger said, the company has started drilling again in western Kansas, with great success. He estimates that the company now drills profitable wells, almost all vertical, 65 to 70 percent of the time. The Kansas wells are actually more profitable than the North Dakota wells, because drilling costs $550,000 in Kansas and $11 million in North Dakota – but the volumes of oil produced in the Bakken are much greater, he said.
Lario said Wells Fargo and JP Morgan were the joint lead arrangers of the facility and that Bank of America, US Bank and Regions Bank are participating in the financing syndicate.
Contributing: Associated Press