Energen Resources Corp., a subsidiary of Energen Corp., Birmingham, Ala., (NYSE: EGN) plans to acquire Permian Basin properties from a private company for $168 million. The transaction is expected to close by the end of the year. The properties to be acquired include the North Westbrook Unit in Mitchell County, Texas, and two smaller fields nearby, and encompass approximately 15,000 gross acres. The purchase includes proved reserves of approximately 21.8 million barrels of oil equivalent (80% undeveloped, 90% oil) and probable reserves of some 15 million barrels of oil equivalent. Assuming future development costs of approximately $145 million on proved reserves and $80 million on probable reserves, the all-in acquisition cost is $10.62 per barrel ($1.77 per thousand cubic feet equivalent). "This acquisition is an excellent fit for Energen Resources," says James McManus, Energen Resources president and chief operating officer. "While these properties have a smaller component of proved developed reserves than our previous acquisitions, their location adjacent to our successful Southeast Westbrook Unit represents an important expansion in one of our core areas of operation and gives us an excellent opportunity to capitalize on our operating expertise there." The properties are 100% operated and are long-lived with a proved reserves-to-production ratio of more than 30. Production is estimated to be 500,000 barrels of oil equivalent in 2006. Energen has entered hedge contracts to sell oil volumes comparable to approximately 85% of the acquisition's total estimated proved production for 2006 through 2009. Energen plans to use available cash and existing lines of credit to finance the acquisition.
Recommended Reading
Sitio Closes D-J Basin Deal, Looks to Defragment Minerals Space
2024-05-09 - Sitio Royalties closed its acquisition of 13,062 net royalty acres. CEO Chris Conoscenti has a strong pipeline of minerals acquisition opportunities.
Continental Resources Makes $1B in M&A Moves—But Where?
2024-02-26 - Continental Resources added acreage in Oklahoma’s Anadarko Basin, but precisely where else it bought and sold is a little more complicated.
M&A Spotlight Shifts from Permian to Bakken, Marcellus
2024-04-29 - Potential deals-in-waiting include the Bakken’s Grayson Mill Energy, EQT's remaining non-operated Marcellus portfolio and some Shell and BP assets in the Haynesville, Rystad said.
Permian Activity in ‘Low-to-no-growth’ Mode for First Half
2024-02-22 - After multiple M&A moves in 2023 and continued E&P adherence to capital discipline, Permian Basin service company ProPetro sees the play holding steady.
Chord Juggles Closing $4B Enerplus Deal, Plans to Drill 4-mile Laterals
2024-05-10 - Chord Energy expects to close its Enerplus acquisition by the end of May but, for now, is focused on three-mile and, eventually, four-mile laterals in the Williston Basin.