Denver-based Carbon Natural Gas Company (CRBO), which operates oil and natural gas wells in the Appalachian and Illinois basins, has formed a new entity with two undisclosed institutional investors to develop and acquire assets in Southern Appalachia.
Carbon Appalachian Company LLC was formed with $100 million and has acquired producing properties located mostly in Tennessee for $20 million from an undisclosed seller. Carbon Appalachian's field development and enhancement projects on the new properties are expected to begin in the second half of this year. Those properties have current production of 3.6 MMcfe/d, consisting of 92% natural gas.
CRBO said it owns just a 2% equity interest in the new company, but has the ability to earn up to an additional 20% after certain operational thresholds are met. The company has also contributed a portion of its working interest in undeveloped properties in Tennessee to Carbon Appalachian that are prospective for the Chattanooga Shale.
CRBO is traded over-the-counter. The company has more than 270,000 net acres that are 75% held-by-production. It has interests in over 900 producing oil and gas wells in six states targeting a variety of formations, including the Berea Sandstone, Chattanooga Shale and the Lower Huron Shale, among others.
CRBO will manage the new company, which would utilize part of the $100 million investment to continue acquiring properties in the southern part of the Appalachian Basin.