Dune Energy Inc., Houston, (Amex: DNE) reports it will sell its Barnett shale assets in Denton and Wise counties, Texas, for $41.5 million and focus its efforts on its Gulf Coast fields.

As of Dec. 31, Dune’s Barnett shale proved developed reserves totaled 19.3 billion cubic feet equivalent in 35 producing wells, plus six wells with behind pipe pay awaiting frac stimulation. An additional 13 proved developed locations contain an estimated 14.1 billion cubic feet equivalent of net reserves.

The Barnett shale reserves represent about 19% of Dune’s total proved reserves, says chief executive James A. Watt. First-quarter 2008 revenue attributable to Dune’s Barnett shale operations totaled $7.64 per thousand cubic feet equivalent, while expenses were $4.36 per thousand cubic feet equivalent. Dune’s Gulf Coast operations yielded revenue of $12.14 per thousand cubic feet equivalent, while costs totaled $4.14 per thousand cubic feet equivalent.

Operating profit for the Barnett shale and Gulf Coast were $3.28 and $8 per thousand cubic feet equivalent, respectively.

Watt added that the disposition of the Barnett shale properties will allow Dune to focus on the substantially higher rates of return generated by its Gulf Coast fields, the majority of which were acquired last year. Proceeds from the sale will be used to eliminate corporate debt and for general working capital.

Dune’s annual production guidance as of first-quarter 2008 totaling approximately 15 billion cubic feet equivalent remains unchanged. Second-quarter production is anticipated to average about 40 million cubic feet equivalent per day.

With upgrades and repairs now completed, the company will resume its drilling program at Garden Island Bay this month. In addition, Dune plans to spud a second well in the Chocolate Bayou Field in September.

“The disposition of the Barnett shale assets represents a turning point in Dune’s overall corporate strategy, which is designed to enhance shareholder value via a concentrated focus on the exploration and development of our superior portfolio of Gulf Coast properties,” Watt said. “Our Gulf Coast properties, as we demonstrated during 2007, allow the company to benefit from solid reserve replacement at a much higher rate of return and lower operating costs. This will be our focus moving forward.” 

--JAS