Questar Corp.'s exploration and production (E&P) subsidiary has closed the acquisitions from multiple sellers of two natural gas development properties in northwest Louisiana for $659 million.

When Questar Exploration and Production Co. announced last month that it would buy the properties, located in Red River and Bienville parishes near the company's existing operations in the Elm Grove Field, it estimated that the assets would add 276 Bcfe of net proved reserves as of the effective date, Jan. 1, with 20% of them currently proved developed (see NGI, Feb. 4). Proved plus probable and possible reserves were estimated at 593 Bcfe. In addition to 74 existing producing wells, another 852 future development well locations on a combination of 20-acre and 40-acre density have been identified.

Development targets are the same as those being exploited by Questar E&P at the Elm Grove Field -- multiple stacked tight-gas sands in the Cotton Valley and Hosston formations at depths ranging from 6,500 to 10,500 feet. Gross reserves attributable to future vertical wells are expected to range from 0.7 Bcfe to more than 3.25 Bcfe; gross completed vertical well costs are estimated to range from $1.7 million to $2.4 million.

Questar last week also revised 2008 E&P guidance and underlying assumptions to incorporate the newly acquired properties, the recent increase in natural gas and crude oil prices and additional natural gas fixed-price hedges. Earnings per diluted share, previously stated as $2.90-3.05, were revised to $3.05-3.20. The company estimates that a $1/MMBtu change in the average New York Mercantile Exchange price of natural gas for the remainder of 2008 would result in about a 2-cent change in earnings per diluted share.

Questar E&P annual production, previously stated as 148-151 Bcfe, was revised to 160-163 Bcfe.

Questar E&P said it has hedged about 78% of forecast natural gas and oil-equivalent production for the remainder of 2008 with fixed-price swaps and has hedged about 2% of its forecast natural gas production for the remainder of the year with basis-only swaps. The company has added 11 Bcf of natural gas fixed-price swaps for the remainder of 2008, 28.1 Bcf for 2009, and 28.4 Bcf for 2010 since it last disclosed hedge positions on Feb. 12.

COO Chuck Stanley said Questar is in a position to grow Questar E&P production 14-16% this year.

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