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Energen Resources Closes $30M Purchase of San Juan Gas Reserves

Energen Resources Corp. has finalized its $30 million purchase of proved and probable natural gas reserves in the San Juan Basin from Dominion Resources Inc., the company said Wednesday.

The Birmingham, AL-based energy company picked up an estimated 30 Bcf of gas reserves in the Carracas Canyon area of the San Juan Basin in New Mexico, where Energen Resources has a large resource base (902 Bcfe in 2005). Energen Resources plans to invest roughly $100 million in 2007 to drill new wells in the San Juan Basin area, said Energen spokeswoman Julie Ryland.

Approximately 22% of the acquired reserves are currently producing, about 51% are proved undeveloped and the remaining 27% are classified as probable reserves, Energen Resources said.

This is a "very small acquisition," Ryland said, adding that the company refers to it as a "tuck acquisition." All told, Energen Resources has 1.7 Tcf of natural gas reserves in the four areas in which it is active, San Juan Basin, Permian Basin, North Louisiana/East Texas and the Black Warrior Basin in Alabama, she noted.

To help remove some uncertainty in the year ahead, the company said that 69%, or 42.6 Bcf, of its estimated 2007 natural gas production of 62.1 Bcf has been hedged at the Nymex price of $8.93/Mcf. And 71% of its estimated 2007 oil production, or 2.7 MMBbl of 3.8 MMBbl, has been hedged at the Nymex price of $69.06 a barrel.

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