Cross Timbers Oil Co. purchased a 50% interest in Spring HoldingCo., a private Tulsa, OK-based oil and gas producer, for $42.5million. The deal is expected to close June 30.

Spring, Holdings, through its subsidiary Spring Resources, Inc.,owns interests in about 1,400 producing wells on 340,000 net acreslocated primarily in the Arkoma Basin of Arkansas and Oklahoma. Itcurrently operates wells representing 85% of the reserve value andhas estimated proved reserves of 264 Bcfe, of which 99% is naturalgas. Proved developed reserves account for 82% of total provedreserves. The company produced 66 MMcf/d in the first quarter of1999.

Cross Timbers ascribes $20 million in value to the non-producingassets it acquired in the purchase. These include Mega Natural Gas,a gathering and marketing company, other compression and gatheringassets and undeveloped acreage.

“Cross Timbers has long sought a meaningful position in theArkoma Basin,” stated Steffen Palko, president of Cross Timbers.”This basin is well known for its shallow production decline rates,multiple formations and complex geology- attributes that havehistorically allowed Cross Timbers to add more than 50% to reservesacquired.”

Lehman Brothers Holdings Co. bought the other 50% interest atthe same price. Cross Timbers and Lehman Brothers will have equalrepresentation on Spring Holdings’ board of directors. Thetransaction requires approval of the banks of both Cross Timbersand Spring Holding Co.

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