A day after announcing it would buy some natural gas-rich acreage in Colorado, Berry Petroleum Co. said Tuesday it has set up a joint agreement with Petro-Canada Resources (USA) Inc. to develop the Coyote Flats Prospect in the Uinta Basin of northeast Utah. Once a defined drilling program is finished, Berry would own half of the 72,000 undeveloped acres.
On Monday, Berry announced it would spend $110 million to buy some assets in the Niobrara fields in northeastern Colorado (see Daily GPI, Dec. 7). Berry also has been building its Uinta Basin stake. Last summer, the company and an undisclosed partner set up a joint exploration and development agreement with the Ute Indian Tribe to develop 125,000 acres of tribal lands there (see Daily GPI, July 21).
In the transaction announced Tuesday, Berry will operate the Petro-Canada field in the Uinta Basin, and estimated that its total obligation under the agreement will be about $10.3 million, depending on drilling costs.
Berry CEO Robert Heinemann said the company was buying into one completed well in the Ferron sand that has tested at more than 1 MMcf/d of natural gas and is awaiting pipeline hook-up. “By the end of December, we intend to begin drilling the first of three test wells into the Ferron sand to a depth of approximately 7,500 feet.”
Berry also will drill a six-well Emery coalbed methane (CBM) pilot, “which is based on encouraging coal thickness encountered in the drilling of the earlier Ferron well. This coal, found at approximately 4,500 feet, was cored and has potential to be commercially successful,” said Heinemann. When this portion of the drilling obligation is completed, Berry will own half of the acreage.
Michael Duginski, Berry’s senior vice president of corporate development, said the acreage would add to the company’s “growing portfolio of assets in the Rockies.” The acreage, he said, is only 35 miles southwest of Berry’s Brundage Canyon producing asset, “and will complement our asset base by adding both potential high-volume natural gas producing wells and long-lived gas production through the CBM development. We paid $1.3 million at signing and expect to drill all of our obligation wells in 2005 for around $9 million, which will allow us to earn our interest in the acreage.”
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