Continental Resources Inc. (NYSE: CLR) said Oct. 27 it formed a joint venture (JV) with South Korea’s SK E&S Co. Ltd., a move that develops otherwise low-priority northwest Cana Woodford natural gas assets for the company.

The $360 million deal sells SK a 49.9% interest in Continental’s 44,000 net acres in the “highly prospective” northwest Cana area of the Anadarko Woodford Shale play—primarily in Blaine and Dewey counties, Okla. It includes interest in 37 producing wells.

“Given that Cana was not a focus for Continental, we believe this development should be viewed favorably as it allows Continental to develop these assets with minimum associated capex,” said analysts John Freeman and Andrew Coleman, Raymond James.

Oklahoma City-based Continental’s capex is largely devoted to the Bakken and Oklahoma’s SCOOP this year and the next.

Continental has about 360 potential wells in the Cana with net, unrisked resource potential of 475 thousand barrels of oil equivalent. The JV structure should deliver positive cash flow for the company throughout the life of the project, said Jack H. Stark, Continental's president and COO.

Continental received $90 million at closing, and SK has committed to pay an additional $270 million to carry 50% of Continental's remaining share of future drilling and completion costs. Continental said it expects no change in its 2014-15 capital expenditures, its production mix of crude oil and natural gas or its overall production targets as a result of the agreement.

"We are excited to establish this joint venture with such an established and highly regarded major international energy company," said Harold G. Hamm, Continental's chairman and CEO. "We are proud SK has chosen to join with Continental in SK's initial investment in U.S. shale natural gas."

The JV establishes an area of mutual interest (AMI) in northwest Cana and certain incentives for the partnership to expand its leasehold position. Continental will be the operator for all current and future wells operated by the JV. Drilling in the AMI is planned for November, with four operated rigs running by the end of the year.

The deal overall looks attractive from a valuation perspective, implying roughly $13,363 per acre taking into account the timing of drilling carries, said David Deckelbaum, director, equity research analyst, KeyBanc Capital Markets Inc., in an Oct. 27 report.

The price “nearly doubles our implied acreage valuation in our model and recent industry deal comps for Northwest Cana gas assets,” he said.

Nearby operators include Newfield Exploration (NYSE: NFX) and Cimarex Energy (NYSE: XEC).

“NFX holds perhaps the most comparable acreage for which our revalued net asset value (RNAV) currently implies $5,500 per acre, signaling the upside potential valuation that CLR could create in the development mode with up to $5 per share (10%) RNAV accretion to NFX by our estimate,” he said.

SK E&S is a subsidiary of SK Group, one of the largest conglomerates in South Korea and part of SK Holdings, a Fortune Global 100 company. SK Holdings ranked 64th in the 2013 Fortune Global 500.

J. J. Yu, president and CEO of SK E&S, said the company has joined a proven leader in developing U.S. unconventional resource plays “in what we expect will be a long-term strategic relationship in energy production."

SK has taken an interest in U.S. oil and gas before. In March 2013, through SK E&P America, SK acquired a 75% stake of the Oklahoma’s Grant and Garfield counties’ oil producing field and a 50% stake of the Crane County, Texas, oil producing field in a deal for $360 million. The fields are owned by Plymouth and KA Henry.

SK produces almost 70,000 barrels per day from seven oil producing fields, 15 oil and gas perspective fields and four LNG projects from 15 countries including oil fields in the U.S.