Master limited partnership EV Energy Partners LP, Houston, (Nasdaq: EVEP) and privately held parent EnerVest Ltd. plan to acquire oil and gas properties in the Ohio Appalachian Basin from Range Resources Corp., Fort Worth, (NYSE: RRC) for a combined $330 million. EVEP will acquire a 46.15% interest in the assets for $151.8 million.
The Ohio tight-gas properties include approximately 465,000 gross acres (418,000 net) and 3,306 wells (3,018 operated) producing primarily from the Clinton and Medina formations. Net production is approximately 25 million cu. ft. equivalent per day (70% gas).
EVEP’s interests include approximately 193,000 gross acres with more than 90% held by production. Estimated proved reserves as of Jan. 1 net to EVEP are approximately 78.8 billion cu. ft. equivalent (75% proved developed producing), with 19.7 billion probable and possible.
Current daily production net to EVEP is approximately 11.3 million cu. ft. equivalent.
The reserves-to-production ratio is 20 years, or 15 years for proved developed producing properties.
Upside potential includes 388 identified proved undeveloped drilling locations, primarily in the Clinton and Medina formations. Significant potential in the Knox group formation exists as well. The properties include about 1,600 miles of pipeline and gathering-system infrastructure.
John B. Walker, EVEP chairman and chief executive, says, “This acquisition is our second in the Appalachian Basin within the past six months. It provides EVEP with additional long-life base production and development drilling opportunities in an area where we have a sizeable asset position and substantial experience. In addition, it provides us with a significant opportunity for future production growth through drilling in the Knox group formation, a play where EnerVest has had drilling success over the past six years.”
Range chairman and chief executive John Pinkerton says, “The sale of the Ohio properties will help streamline our business and provide additional flexibility in implementing our 2010 capital spending program. Importantly, we are well positioned to deliver another year of double-digit production and reserve growth on a per share basis, while maintaining our strong financial position.”
EVEP intends to hedge a substantial portion of the acquired production. The deal was expected to close by the end of March.
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