Houston-based Noble Energy Inc. expanded its core operations in the Wattenberg field in Montana last week with the purchase of privately held United States Exploration Inc. for $411 million. The transaction will add an estimated 248 Bcfe to Noble’s proved reserves, of which 41% are proved developed and 55% are natural gas.

United States Exploration, based in Billings, MT, estimated probable reserves at 217 Bcfe and said together, proved and probable resources are estimated to be equally divided between oil and gas. The acquisition cost was estimated at $1.66/Mcfe.

“United States Exploration’s position in Wattenberg is an extremely good fit with our operations in the field,” said Noble CEO Charles D. Davidson. “Their acreage and production are in many instances directly offsetting Noble Energy’s and will add over 6,000 projects in the Wattenberg field. We expect significant technical and operational synergies by applying what we have learned to these properties, which are less developed than Noble Energy’s.”

Noble now operates about 218,000 net acres in the Wattenberg field. United States Exploration’s reserves and production are located on 65,000 net acres in the field’s Denver-Julesburg (D-J) basin, and it owns an interest in 512 active wells. Most of its acreage, said Noble, lies within the scope of amendments to Rule 318A, which allow for increased density drilling in the field to 20-acre spacing.

Noble is estimating output to grow from the current rate of 20 MMcfe/d to about 30 MMcfe/d in 2006, rising to about 70 MMcfe/d by the end of 2007. Peak production of about 90 MMcfe/d is expected to be reached by 2011. Two drilling rigs are currently operating on United States Exploration’s Wattenberg acreage, and Noble said it will add two rigs this year and another two by the end of 2007.

Capital spending on the acquired properties will be focused on accelerating production and developing reserves “quickly.” This year, capital expenditures are expected to be $100 million. Total capital expenditures from 2007 through 2010 are expected to be $550 to $600 million.

Noble also has the opportunity to earn up to 350,000 net acres by drilling additional wells on acreage in the greater D-J basin currently under option to United States Exploration. Last month, Noble entered into an acreage-earning agreement with Teton Energy covering 184,000 net acres in the basin. In addition to the 534,000 net acres covered by earning agreements, Noble will have ongoing production operations covering 367,000 net acres.

Prior to closing, which is expected by the end of March, United States Exploration will retire all company debt, terminate its commodity hedges and make all severance payments, Noble said. United States Exploration’s significant shareholders include funds managed by Lime Rock Partners and Greenhill Capital & Co.

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