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Denver-based Medicine Bow Energy Corp. said Thursday that it has acquired 100% of the capital stock of Edison Mission Energy Oil & Gas (EMEOG) for approximately $100 million. EMEOG is a subsidiary of Edison Mission Energy Fuel, which is a subsidiary of Edison Mission Energy, an Edison International company. The acquisition closed on Jan. 7. EMEOG's principal asset is a 30%, direct and indirect, equity interest in Four Star Oil & Gas Company (FSOG), an exploration & production company with assets located in the Rocky Mountains, Mid-Continent and Gulf Coast regions of the United States. "Through the Edison Mission Energy Oil & Gas acquisition, our shareholders have acquired a significant equity position in a privately-held energy company with very attractive assets," said Mitchell L. Solich, Medicine Bow Energy Corp.'s CEO. "The investment opportunities and substantial free cash flow captured by this acquisition advances our mission of creating value for our shareholders." Medicine Bow Energy contracted Rivington Capital Advisors LLC to act as its exclusive financial advisor for the transaction.
Range Resources Corp. has set its 2004 capital budget at $126 million, which will exclude acquisitions. The Fort Worth, TX-based independent oil and gas company noted that the new budget represents a 21% increase over 2003 expenditures. It includes $109 million for drilling and recompletions, $15 million for land and seismic and $2 million for the expansion and enhancement of gathering systems and facilities. The company allowed that acquisitions, particularly those in proximity to existing properties, will continue to be pursued but are considered too unpredictable to be specifically budgeted. In 2003, Range's capital expenditures excluding acquisitions were funded with less than 75% of internal cash flow. Based on the current futures prices and existing hedges, 2004 capital spending should again be funded with less than 75% of internal cash flow. The company explained that excess cash flow may be used to reduce debt, fund acquisitions, increase capital expenditures or to repurchase stock. Going through the 2003 breakdown, Range said approximately $104 million was spent on capital projects and an additional $93 million on acquisitions. The company participated in the drilling of 359 gross (201 net) wells and 56 gross (45 net) recompletions. In 2004, Range set a goal to drill 409 gross (237 net) wells and to undertake 35 gross (29 net) recompletions. Approximately half the budget has been allocated to the Southwest region, including the Permian Basin, the Midcontinent and East Texas, with the remaining 50% equally divided between the Gulf Coast and Appalachia regions. "While year-end engineering is not complete, the 2003 drilling program was clearly successful," said John H. Pinkerton, Range's president. "Our acquisition effort yielded excellent results, more than replacing the year's production. In total, we expect that reserve replacement comfortably exceeded 200% for the year. The increase in the 2004 capital budget reflects opportunities generated by last year's drilling and acquisitions, strong energy prices, the company's enhanced financial strength and an attractive project inventory. We expect the 2004 drilling budget will allow us to continue to more than replace production, to fuel a steady increase in production and, based on current oil and gas prices, to generate exceptional rates of return."
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