Sioux Falls, SD-based NorthWestern Energy Corp. on Tuesday said it has purchased operating and nonoperating natural gas production interests in Montana’s Bear Paw Basin from privately held, Houston-based NFR Energy LLC.

The purchase price was $19.5 million, subject to adjustments, NorthWestern said.

To support its local gas utility operations in Montana, NorthWestern acquired about 600 producing wells and two connected pipeline gathering systems with more than 400 miles of pipe spread over four counties in the north-central part of the state (Blaine, Choteau, Fergus and Hill counties).

CEO Bob Rowe, a former Montana regulator, said the Bear Paw purchase is part of the company’s broader strategy “to provide our Montana natural gas customers with a regulated source of proven supply from within our region that should help provide price stability to the gas portfolio for many years. We are focused on traditional gas assets with longer and more stable production lives. We believe this investment in Montana provides very good long-term value.”

The acquisition is expected to provide natural gas to ratepayers at a cost of less than $4/Dth for at least five years, NorthWestern said.

Net proven developed producing reserves purchased by NorthWestern are estimated to total 13.4 Bcf, and the net production attributable to the purchased assets this year will be about 1.6 Bcf, or about 8% of NorthWestern’s current annual utility gas load in Montana, the company said.

NorthWestern said it funded the deal with a portion of the proceeds from its August bond issuance and with internally generated cash. Its intent is to capitalize the asset on a long-term basis at about 50%, 50% equity. The company plans to include the cost of the Bear Paw Basin properties as part of its monthly gas supply rate adjustment on an interim basis starting Oct. 1, it said, pending a filing with the Montana Public Service Commission for full review of the additional costs.

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