Calgary-based Enterra Energy Trust completed its acquisition of Rocky Mountain Gas Inc. (RMG) last week and entered into another purchase agreement for the outstanding common shares of High Point Resources Inc. for US$250 million.
High Point, whose operations are focused on the deeper part of the Western Canada Sedimentary Basin in western Alberta and British Columbia, has 11.5 million boe of proved and probable reserves, consisting of 54.5 Bcf of natural gas and 2.4 million bbl of oil and natural gas liquids, which will more than double Enterra's current reserves. The transaction will add 3,800 boe/d of production bringing Enterra's overall production to more than 10,000 boe/d. It also includes more than 135,000 net acres of land, with more than 100 identified drilling locations.
Enterra believes the transaction will be accretive immediately to cash flow on a per unit basis, net asset value and reserves, based on an independent reserve report dated Dec. 31, 2004.
"This acquisition is consistent with and extends Enterra's business plan, providing both existing production and substantial development opportunities," said Reg Greenslade, Enterra chairman. "We also hope to supplement our current staff by retaining some of High Point's staff once the acquisition closes."
The previously announced acquisition of RMG from U.S. Energy Corp. and its majority-owned subsidiary, Crested Corp., was completed on June 1. RMG holds natural gas assets in Montana and Wyoming. A portion of the Wyoming assets currently generates net production of 2.2 MMBtu/d. RMG also has 130,000 net acres of production rights to coalbed methane.
The final terms of the agreement have been amended to require RMG to divest its 17% ownership of Pinnacle Gas Resources Inc., which also lowered the purchase price to US$20 million.
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