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Cross Timbers Purchases Arkoma Basin Assets

Cross Timbers Purchases Arkoma Basin Assets

Cross Timbers Oil Co. purchased a 50% interest in Spring Holding Co., a private Tulsa, OK-based oil and gas producer, for $42.5 million. The deal is expected to close June 30.

Spring, Holdings, through its subsidiary Spring Resources, Inc., owns interests in about 1,400 producing wells on 340,000 net acres located primarily in the Arkoma Basin of Arkansas and Oklahoma. It currently operates wells representing 85% of the reserve value and has estimated proved reserves of 264 Bcfe, of which 99% is natural gas. Proved developed reserves account for 82% of total proved reserves. The company produced 66 MMcf/d in the first quarter of 1999.

Cross Timbers ascribes $20 million in value to the non-producing assets it acquired in the purchase. These include Mega Natural Gas, a gathering and marketing company, other compression and gathering assets and undeveloped acreage.

"Cross Timbers has long sought a meaningful position in the Arkoma Basin," stated Steffen Palko, president of Cross Timbers. "This basin is well known for its shallow production decline rates, multiple formations and complex geology- attributes that have historically allowed Cross Timbers to add more than 50% to reserves acquired."

Lehman Brothers Holdings Co. bought the other 50% interest at the same price. Cross Timbers and Lehman Brothers will have equal representation on Spring Holdings' board of directors. The transaction requires approval of the banks of both Cross Timbers and Spring Holding Co.

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