Energy Hunter Resources Inc. will add to its position in the San Andres oil play through an acquisition agreement with Lubbock Energy Partners LLC, the Irving, Texas-based company said March 27.
The acquisition comprises roughly 8,817 gross acres in Cochran County, Texas, 100% of which is HBP by existing production from vertical wells. The deal also includes ownership in about 201 existing wells and 45 identified horizontal drilling locations.
Energy Hunter said it paid $2,083 per acre for the acquisition, which equates to a total value of about $18.4 million.
"The low-cost acquisition announced today effectively doubles the size of our existing footprint in the San Andres, one of the most economic oil plays in the continental United States," Gary C. Evans, chairman and CEO of Energy Hunter, said in a statement.
The acquisition will add to the 9,413 net acres in Cochran that Energy Hunter acquired in the San Andres last December. In total, the company now holds nearly 20,000 gross acres in the play, Evans said.
"The contiguous nature of the acreage position will enable Energy Hunter Resources to achieve operational efficiencies that will lower overall cost and further increase the anticipated internal rates of return for our shareholders," he said.
Energy Hunter plans to fund its acquisition from Lubbock Energy Partners through a combination of cash and restricted convertible preferred stock.
The final transaction is expected to close in August in order to meet certain requirements of the seller, though Energy Hunter said it already took over physical operation of the properties. The deal has an effective date of Jan. 1, according to the company press release.
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