DTE Gas Resources, part of DTE Energy's unconventional natural gas group, said Friday it has acquired the leasehold mineral rights and 40 producing natural gas wells on about 18,000 acres in the Barnett shale formation in Jack County, TX near Fort Worth. More than 90% of the 18,000 acres is undeveloped.
"The acquisition of producing wells provides us with the immediate capacity to deliver natural gas from this promising resource," said DTE Energy President Gerard Anderson. "The mix of producing wells and undeveloped acreage in this proven area of the Barnett shale complements and diversifies our existing position of approximately 55,000 acres in the basin. Based on our experience as a producer in Michigan's Antrim shale, we see great potential for the Barnett shale formation."
The company's experience in unconventional gas production dates to 1990, when it began development of the Antrim shale formation in northern Michigan. This experience in developing gas reserves from shale formations has provided DTE Energy with a strong base of technical and operational expertise, making expansion of the company's Barnett shale operations an attractive growth opportunity.
"The acquisition of these wells and leasehold rights is a good fit with our previously announced cash redeployment strategy," Anderson said. "From 2005 to 2008 we expect to have approximately $1 billion of cash available for nonutility equity investments or stock repurchase. We believe we have a solid pipeline of nonutility investment opportunities over the short term that are consistent with both our investment strategy and our value-creation goals."
Richard Redmond, president, DTE Gas Resources, said both the Antrim and Barnett shale formations offer a relatively low-risk drilling potential. "These formations are proven producers," he said. "Our drilling success rate has been over 95% in the Antrim shale, and our early experience in proven areas of the Barnett shale has shown similar results."
Redmond said the company expects to invest up to $100 million this year in the Barnett shale operations, including this acquisition.
DTE Energy's net production from the Antrim shale averages about 60 MMcf/d from about 1,950 wells on holdings of 290,000 acres. The company operates about 75% of those wells, with partners operating the balance. Plans for further development of the company's Antrim shale holdings include an investment this year of about $40 million and the drilling of 100 to 140 new wells.
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