Calgary natural gas producer Bonavista Energy Corp. on Wednesday plans to expand its Western Canadian operations after announcing a deal that would double its land position in the Deep Basin and increase estimated output by 10% through a C$155 million agreement with an undisclosed company.

Production from the 113,000 net acres to be acquired is estimated at 6,700 boe/d, 94% weighted to natural gas. The land is adjacent to Bonavista's existing Deep Basin position in west-central Alberta.

Around 27 high-impact natural gas horizontal drilling locations have been identified, with primary zones in the Wilrich and Bluesky formations and secondary targets in the Rock Creek, Notikewin, Gething, Cadomin and Second White Specs.

"In addition, the acquired properties offer numerous low risk vertical drilling locations and recompletion opportunities with a predictable, low-cost production base that is well positioned for a gradual improvement in natural gas prices," Bonavista stated.

Total proved reserves to be acquired are estimated at 18.2 million boe, which includes 102 Bcf of natural gas and 1.52 million bbl of oil and natural gas liquids (NGL). Proved plus probable reserves, which would add 7% to Bonavista's base, are estimated 24.12 million boe, including 133 Bcf of gas and 2.08 million boe of oil and NGLs.

Two gas processing facilities with a total of 102 MMcf/d of gross throughput capacity also are part of the purchase.

Once the transaction is completed, which is now expected by Oct. 1, Bonavista said its total output would be 74,500 boe/d, which would be about 10% higher than today and 61% weighted to natural gas. Gas-weighted output is now around 59%.

The former energy trust converted in January 2011 to a dividend-paying corporation on the Toronto Stock Exchange under the symbol "BNP."

"This acquisition...will ultimately lead to improvements in both capital and operating efficiencies in the area," the producer stated. To accommodate growth, Bonavista's board agreed to increase the 2012 capital spending budget to C$410 million.

Including the acquisition, 4Q2012 production is now forecast to be 73,000-74,000 boe/d, with average output this year of 69,500-70,500 boe/d.

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