Denver-based St. Mary Land & Exploration Co. said it closed the previously announced $153 million acquisition of oil and gas properties in South Texas from Tulsa, OK-based Rockford Energy Partners II LLC. The acquired properties target natural gas in the Olmos formation. The net cash paid at closing was $151 million and the acquisition was funded with cash on hand and borrowings under the company's existing credit facility. "Together with our existing assets in the area, we now have a sizable platform from which to grow our business in South Texas," said St. Mary CEO Tony Best. "We continue to work on building our drilling inventory throughout the company." The company has been active on the asset acquisition and sale front in recent years. In late 2006, St. Mary closed on a deal to acquire West Texas oil and gas assets from several undisclosed private parties for $250 million cash (see NGI, Nov. 6, 2006). Earlier this year, the company paid $29.5 million for assets targeting the Olmos shallow gas formation in the Catarina Field in Webb and Dimmit counties, TX (see NGI, June 18). Last month, the company contracted Albrecht & Associates Inc. to market a package of nonstrategic oil and gas properties located primarily in the Rockies and Midcontinent regions (see NGI, Sept. 17). The package represents approximately 74 Bcfe of proved oil and gas reserves.

The joint powers authority financing arm for public power in Southern California received another "AA-" credit rating from Standard & Poor's Ratings Services (S&P) for its $511.5 million revenue bonds. Proceeds from the bond sales will be used to fund an aggressive long-term natural gas purchase program for five munis, including the Los Angeles Department of Water and Power and Southern California Public Power Authority (SCPPA), which will use the proceeds to acquire a 30-year natural gas supply from J. Aron Co. including five nearly identical prepaid gas sales agreements with the SCPPA municipal utilities involved. The bonds are expected to be priced soon with Goldman Sachs as the sole manager. S&P noted that the stable outlook reflects the outlook on Goldman Sachs. Fitch Ratings gave the offering a stable outlook earlier in the month.

Enterprise Products Partners LP said production through the Independence Hub natural gas platform in the deepwater Gulf of Mexico has reached 440 MMcf/d from nine wells. As the initial 15 wells are brought on-line, producers expect that production at Independence Hub will reach its capacity of 1 Bcf/d by the end of the year. Located in 8,000 feet of water on Mississippi Canyon Block 920, approximately 123 miles southeast of Biloxi, MS, Independence Hub is in the deepest waters in which a production platform has ever been installed and also is the world's largest offshore gas processing facility. Installation was completed earlier this year (see NGI, March 12). The project is backed by the Atwater Valley Producers Group, which consists of Anadarko Petroleum Corp., Devon Energy Corp., Eni and Hydro, along with the owners of the Independence Hub, Enterprise and Helix Energy Solutions Group Inc. First gas was achieved on schedule and within budget, the group said in March. The project is seen as a blueprint for future deepwater exploration (see NGI, Oct. 23, 2006).

Independent exploration and development company Baseline Oil & Gas Corp. closed its acquisition of producing gas and oil properties in South Texas from DSX Energy Limited LLP, Kebo Oil & Gas Inc. and 25 other related parties for an adjusted cash consideration of $96.6 million, the company said. The acquired properties consist of 2,374 net acres located within the Blessing Field in Matagorda County, TX. As of June 1, the effective date of the acquisition, the properties had independently engineered proved reserves of 42.2 Bcfe, including 8.1 Bcfe of proved developed producing, 13.0 Bcfe of proved developed nonproducing, and 21.1 Bcfe of proved undeveloped reserves. Approximately 77% of the total proved reserves is natural gas. Based upon the adjusted consideration of $96.6 million, the implied cost per Mcfe of proved reserves is $2.30, and $1.20 per Mcfe if probable reserves are included. In addition to proved reserves, Baseline said it has identified an unrisked net 38 Bcfe of probable reserves. Net investment required to develop the probable reserves is estimated at $30 million. The properties are located on trend with several prolific producing Frio fields, Baseline said. The Blessing Field has produced more than 300 Bcf of natural gas and 15 million bbl of crude oil from 19 Frio sands. The previous owners drilled and completed 12 successful wells on the properties with a 100% success rate, Baseline said.

Intermountain Gas Co. put its second consecutive purchased gas adjustment (PGA) rate decrease in effect and Spokane, WA-based Avista Utilities asked the Idaho Public Utilities Commission (PUC) to lower its rates following a similar drop in the PGA. Citing lower wholesale gas prices in 2007, Boise, ID-based Intermountain told the Idaho PUC it could lower its retail gas utility rates for the second consecutive year. Intermountain has proposed an 8% cut. The utility's annual PGA turned up another year in which wholesale costs have been running lower than had been anticipated when the last gas cost rates were set a year earlier. Base rates will be unchanged. Meanwhile, Avista told the PUC that it wants approval to decrease its annual PGA by about 4.5%, effective Nov. 1. Avista's 70,000 customers in northern Idaho have until Oct. 24 to comment on the utility's request. Avista fixed costs of supplying gas and some variable costs of gas supply are covered in base rates, which are adjusted only after the company goes through a rate case. Variable costs, such as wholesale market prices for gas, transportation and storage, are adjusted annually through the PGA process.

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