Phillips Acquires Coal-Bed Assets
Phillips Petroleum announced last week that it has done some
coal-bed methane shopping recently. Phillips acquired River Gas
Corp., a privately held coal-bed methane producer, as well as
coal-bed methane positions of three other companies located in the
Powder River Basin of Wyoming. The cost of the four transactions
was $123 million in cash.
As a result of the transactions, Phillips expects to initially
add about 215 Bcf of net reserves, 100 of which are
proved/developed, and the remaining 115 Bcf are proved/undeveloped.
Phillips estimates the reserves are being acquired at about 57
cents per Mcf. Included in the deal, the company acquired
significant acreage in major coal-bed methane basins.
The River Gas Corp. acquisition includes 166,000 gross acres in
the Drunkards Wash field in Utah and the Whitson field in the Black
Warrior Basin of Alabama. Phillips will own a 25% interest in each
field, which equates to a total combined production from both
fields of 40 MMcf/d. Phillips will only realize 10 MMcf/d for the
first three years due to overriding royalty interests. After three
years, the company's net production from the assets will move to 50
MMcf/d. Phillips expects to drill 330 wells over the next six
The Powder River purchases will increase Phillips' gross acreage
by 90,000 acres, with more than a 90% working interest. This brings
Phillips position in the Powder River Basin to 430,000 gross acres.
The assets bring the company's total net U.S. coal-bed methane
production to 235 MMcf/d, which is expected to increase by almost
50% in the next three years.
©Copyright 2000 Intelligence Press, Inc. All rights
reserved. The preceding news report may not be republished or
redistributed in whole or in part without prior written consent of
Intelligence Press, Inc.