Penn Virginia Acquires Private Texas Reserves

In a $112 million cash transaction, Penn Virginia Corp., headquartered in Radnor, PA, is acquiring Synergy Oil & Gas Inc. of Houston, a privately owned independent. Synergy's exploration and production is focused along the onshore Texas Gulf Coast and in West Texas, holding about 59.2 Bcfe in total net proved reserves, with 55% in natural gas.

Synergy's current net production is 12 MMcf/d and 1,200 b/d, or 19.2 MMcfe, with interests in 25 fields, 20 along the Gulf Coast. Two Texas fields, the SW Rugeley and Tom Lyne, account for 46% of its estimated net proved reserves and 40% of first quarter 2001 net production. Synergy also has interests in 163 producing wells, operating about 86%, and controls 27,300 net developed and 10,000 net undeveloped leasehold acres. It also has 214 square miles of 3-D seismic data.

Penn Virginia CEO A. James Dearlove called the acquisition a "major step forward" for his company. "We have been focusing on the Texas and Louisiana Gulf Coast since 1998, when we opened an office in Houston and first launched a strategic initiative to expand our oil and gas operations outside of Appalachia."

H. Baird Whitehead, president of Penn Virginia's oil and gas company, noted that the acquisition would give the company a "platform to grow the Gulf Coast area."

The transaction results in a purchase price of $1.89/Mcfe proved and $1.04/Mcfe on a risked proved, probable and possible basis, according to Penn Virginia. With the addition, Penn Virginia expects to drill between 15 and 20 wells a year over the next few years, including development drilling on Synergy's Gulf Coast prospects.

The acquisition is set to close by July 23, and will be funded from an existing bank facility.

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