NGI The Weekly Gas Market Report
AEC Oil & Gas Inc. picked up its second group of RockyMountain assets yesterday, announcing its acquisition of theprivately held Piceance Basin properties of Billings, MT-basedBallard Petroleum LLC. Ballard’s Mamm Creek field in northwestColorado is estimated to be worth C$340 million (US$225 million),with 175,000 net undeveloped acres worth about C$35 million and agas pipeline system worth C$31 million.
Daily production this year on the Ballard properties is expectedto average about 45 MMcf. AEC, a subsidiary of Alberta EnergyCompany Ltd. of Calgary, also estimates that Ballard has provedplus one-half probable reserves of 280 Bcfe, worth nearly C$274million, with almost 93% of the purchased reserves in natural gas.AEC said it would sell about C$45 million worth of the non-core oilassets. With the acquisition, AEC has upped its 2001 gas salesforecast to between 1.35 Bcf/d to 1.40 Bcf/d.
“We have clear acquisition criteria, and Ballard is an excellentfit,” said CEO Gwyn Morgan. “We buy concentrated, high-workinginterest, long-life reserves with significant growth potential.” Hesaid that based on current commodity futures prices, theacquisition would add about 50 cents per share in cash flow and 15cents per share to earnings in 2001. The cash purchase, funded withavailable credit lines, is expected to close in February.
Ballard is the second buy for AEC in the Rocky Mountain region inless than a year. Last May, AEC bought McMurry Oil, which owned 1.2Tcf of gas reserves and significant exploration acreage in the JonahField in the Green River Basin in southwestern Wyoming (see Daily GPI,May 3, 2000). AEC also purchased the245-mile Jonah Field gas gathering system, which transports 320 MMcf/dof gas and could be expanded to 440 MMcf/d. Those transactions werevalued at a total of C$1.15 billion.
“Our Jonah field has fully met expectations and is forecast toproduce 180 MMcf/d this year,” said Morgan. “We are now fortifyingthat growth with production from a second neighboring RockyMountain basin.”
Roger Biemans, president of AEC, called Mamm Creek a “relativelyyoung natural gas field where AEC can apply its core competenciesin deep, tight gas to grow production and reserves. The field hasconsiderable growth potential, with more than 500 drillinglocations identified.” In the next three years, he said AEC woulddrill about 300 wells to increase production to about 65 MMcf/d by2003.
“None of the Ballard gas production is committed to fixed pricecontracts and AEC plans to sell the additional volumes through thewell developed transmission systems out of the Piceance Basin tostrong markets in the Pacific Northwest, California and the U.S.Midwest,” Biemans said.
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