Questar Corp. subsidiary Universal Resources will increase itsdaily gas and oil production 20% and reserves 31% with a $157.5million acquisition of HSRTW Inc., a Midcontinent regionexploration and production subsidiary of HS Resources of SanFrancisco.

In the cash transaction announced last week, Universal willreceive 150 Bcfe of proved oil and gas reserves (80% gas) primarilyin Oklahoma, as well as Texas, Arkansas and Louisiana. It alsoreceives another 50 Bcfe of reserves considered probable andpossible. The properties include 1,000 wells in the Anadarko andArkoma basins.

Universal Resources CEO Gary L. Nordloh said the acquisition isaccretive to earnings in the amount of $1.5 to $2 million in 1998.He said the $157.5 million purchase price includes $155 million forthe reserves and other assets of the company, and $2.5 million forworking capital. The amortization rate for the new acquisition is$0.94/Mcfe.

The newly acquired properties have current average dailyproduction rates of 32 MMcf of gas and 870 bbl of oil. Nordloh saidfuture production is hedged for 11 to 18 months under contractswith an average price of $2.30/Mcf for gas and $17.75/bbl of oil.First half production from the properties was 6,725 MMcfe, whichgenerated $8.2 million net of related operating expenses andoverhead, HS said.

“Through the value derived from our Mid-Continent activities, wehave already realized approximately $126 million in proceeds fromproduction and previous divestitures, less approximately $33million for cumulative capital expenditures and overhead. Moreover,we are retaining ownership of HS Energy Services, which hascontributed more than $4.3 million of pre-tax net operating incomesince the acquisition in mid-1996. When the proceeds from thisdivestiture are accounted for, it should be clear that our work inthe Mid-Continent created important value for our shareholders,”said HS Resources President Mike Highum. The transaction isscheduled to close and be effective Sept. 1.

Rocco Canonica

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