Continental Resources, Inc. announces that Franco-Nevada (NYSE & TSX: FNV) has agreed to pay approximately $220 million for a stake in a newly-formed minerals subsidiary. In accordance with the deal terms, the Company will receive the proceeds at closing, offsetting the majority of previously incurred capital expenditures. The amount to be received by the Company at closing is subject to adjustment under the terms of the transaction documents.

In addition, the parties have also committed, subject to satisfaction of agreed upon development thresholds, to spend up to a combined $125 million per year over the next three years to acquire additional minerals through the newly-formed subsidiary. With a carry component on capital acquisition costs, the Company is to fund 20% of future mineral acquisitions. The Company will be entitled to between 25% and 50% of total revenues generated by the minerals subsidiary based upon performance relative to certain predetermined targets.

The Company subsidiary and Franco-Nevada have executed definitive documents evidencing the aforementioned divestiture and the formation of the strategic relationship, subject to customary closing conditions, to acquire minerals in the SCOOP and STACK plays of Oklahoma, primarily in areas operated by the Company. These areas offer prolific well results, excellent economics, proximity to infrastructure and future upside via stacked hydrocarbon-bearing horizons. 

"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," said Harold Hamm, Chairman and Chief Executive Officer. "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." 

"Collaborating with Continental to purchase minerals is a new business development opportunity for Franco-Nevada," stated David Harquail, Chief Executive Officer of Franco-Nevada. "We are pleased to be able to work with this best-in-class operator to further strengthen Franco-Nevada's overall portfolio."  

RBC Capital Markets and Vinson & Elkins LLP acted as exclusive financial and legal advisors, respectively, to the Company.