Looking to raise its production output in Texas, Burlington Resources Inc. has reached a $400 million agreement to acquire substantially all the assets of a privately held company that is a co-owner with Burlington in the prolific Savell Field in the Bossier trend of East Texas. Burlington said the acquisition will "significantly increase" the company's production in the field and raise its Bossier trend leaseholdings to approximately 200,000 net acres.
In addition, Houston-based Burlington will gain additional exploratory rights in the area and related proprietary 3-D seismic data, as well as small non-operated interests in the nearby Bald Prairie and Garby fields, which are also part of the Bossier trend. Burlington agreed to pay $400 million for the assets, subject to purchase price adjustments resulting from operations during the fourth quarter of 2005. The company reported that the transaction has been approved by the boards of directors of both companies and is scheduled to close on Jan. 4, 2006.
Current production from the 26,870 net acres being acquired is approximately 47 MMcfe/d. If completed, the transaction would increase to 100% Burlington's working interests in 16 current producing wells in the Savell Field area and numerous potential offsetting drilling locations.
As of early November, Burlington's net production in the Savell Field averaged approximately 115 MMcfe/d, with four drilling rigs at work on new wells. Additionally, Burlington has recently drilled three exploratory discoveries in nearby areas. During 2006 the pace of development in the Savell Field and these new areas is projected to increase.
"We expect this acquisition to increase our production and offer very favorable economics, particularly since it does not require additional equipment or personnel," said Bobby Shackouls, Burlington's CEO. "It will provide us with greater flexibility to make key field development decisions in the future. And it also illustrates the success we are achieving through our strategy of pursuing tactical acquisitions in our core areas, where we have the advantages of an established producing infrastructure and thorough understanding of local geology, drilling and completion technology and production dynamics."
Including this deal, Burlington to date for 2005 has closed or committed to eight acquisitions totaling approximately $755 million. Altogether, these transactions as well as lease purchases will add approximately 550,000 net acres to the company's development inventory. In March, Shackouls said the company's production "growth goal" is 3-8% this year, which "could extend into 2006" (see NGI, March 7).
The new properties are primarily located in the Bossier, Barnett Shale and Cotton Valley trends in Texas, the San Juan Basin in New Mexico and the Ring Border area of Canada, with additional interests acquired in existing producing blocks in Ecuador.
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