El Paso has acquired leases covering approximately 123,100 acres in Reagan, Crockett, Upton and Irion counties in the University of Texas lease sale, which target the Wolfcamp shale and add to approximately 12,000 net acres of existing leasehold in this play.
The company said that it has now a material position in a new oil shale program with significant resource and production potential.
El Paso remains committed to managing its E&P program for returns and having E&P live within its means.
In addition, the company remains committed to generating free cash flow in 2012.
To that end, the $180m cost of the acquired acreage will be funded over time through portfolio rationalization, and future development capital will compete with other programs in the portfolio.
El Paso Exploration & Production president Brent Smolik said that its acreage acquisition is the culmination of an extensive regional study by its technical team, and we expect it to become a new oil-focused core area.
"Today’s announcement represents our second organic shale entry following our successful acquisition of more than 170,000 net acres in the Eagle Ford shale," Smolik said.