EPL Announces $150 Million Acquisition of South Louisiana Onshore Reserves and Prospects
Energy Partners Ltd. announced last Thursday it has entered into an agreement with a private company to acquire oil and natural gas properties in South Louisiana for $150 million in cash. The transaction includes a two-year exploration partnership covering more than one million acres, an inventory of 22 drillable prospects with a net unrisked potential of 29.5 Bcfe (15.3 Bcfe net risked), proved reserves of 54.2 Bcfe, and low risk probable reserves of 9.1 Bcfe.
The New Orleans-based company said it plans to allocate $120 million of the purchase price to the proved reserves and the remaining $30 million to the upside, including the probable reserves and the prospect inventory. It also expects the acquisition to be immediately accretive to earnings and cash flow per share. The deal is anticipated to close on Jan. 20, 2005, subject to closing conditions and adjustments and the effect of the exercise of preferential rights by third parties.
EPL Chairman Richard A. Bachmann said, "This acquisition takes EPL into a new core area onshore South Louisiana, where our staff has a wealth of experience. We will also step right into an ongoing two rig drilling program, so we expect an immediate impact not just on our reserves but also on our exploratory activity in 2005. Our partnership in this prolific area on the northern side of the Terrebonne Trough will be particularly exciting as we extend EPL's knowledge of productive deep sediments on the Gulf of Mexico Shelf onshore into Louisiana."
The acquisition consists of nine fields, four of which are currently producing a total of 16.9 MMcfe/d net to EPL. The company plans to hedge projected production from proved reserves in the acquisition through year end 2007, using zero-cost collars with floors between $4.50 and $5.00/MMBtu.
Founded in 1998, EPL's operations have been focused in the shallow to moderate depth waters of the Gulf of Mexico Shelf.
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