AEC Doubles Rocky Mountain Presence
AEC Oil & Gas Inc. picked up its second group of Rocky Mountain
assets last week, announcing its acquisition of the privately held Piceance
Basin properties of Billings, MT-based Ballard Petroleum LLC. Ballard's
Mamm Creek field in northwest Colorado is estimated to be worth C$340 million
(US$225 million), with 175,000 net undeveloped acres worth about C$35 million
and a gas pipeline system worth C$31 million.
Daily production this year on the Ballard properties is expected to
average about 45 MMcf. AEC, a subsidiary of Alberta Energy Company Ltd.
of Calgary, also estimates that Ballard has proved plus one-half probable
reserves of 280 Bcfe, worth nearly C$274 million, with almost 93% of the
purchased reserves in natural gas. AEC said it would sell about C$45 million
worth of the non-core oil assets. With the acquisition, AEC has upped its
2001 gas sales forecast to between 1.35 Bcf/d to 1.40 Bcf/d.
"We have clear acquisition criteria, and Ballard is an excellent
fit," said CEO Gwyn Morgan. "We buy concentrated, high-working
interest, long-life reserves with significant growth potential." He
said that based on current commodity futures prices, the acquisition would
add about 50 cents per share in cash flow and 15 cents per share to earnings
in 2001. The cash purchase, funded with available credit lines, is expected
to close in February.
Ballard is the second buy for AEC in the Rocky Mountain region in less
than a year. Last May, AEC bought McMurry Oil, which owned 1.2 Tcf of gas
reserves and significant exploration acreage in the Jonah Field in the
Green River Basin in southwestern Wyoming (see NGI, May
8, 2000). AEC also purchased the 245-mile Jonah Field gas gathering
system, which transports 320 MMcf/d of gas and could be expanded to 440
MMcf/d. Those transactions were valued at a total of C$1.15 billion.
"Our Jonah field has fully met expectations and is forecast to
produce 180 MMcf/d this year," said Morgan. "We are now fortifying
that growth with production from a second neighboring Rocky Mountain basin."
Roger Biemans, president of AEC, called Mamm Creek a "relatively
young natural gas field where AEC can apply its core competencies in deep,
tight gas to grow production and reserves. The field has considerable growth
potential, with more than 500 drilling locations identified." In the
next three years, he said AEC would drill about 300 wells to increase production
to about 65 MMcf/d by 2003.
"None of the Ballard gas production is committed to fixed price
contracts and AEC plans to sell the additional volumes through the well
developed transmission systems out of the Piceance Basin to strong markets
in the Pacific Northwest, California and the U.S. Midwest," Biemans
Carolyn Davis, Houston
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