Berry Petroleum Co. will pay $110 million to purchase more than 130,000 acres of natural gas-rich properties in the Niobrara fields in northeastern Colorado from J-W Operating Co. and other undisclosed sellers. The company, as operator, will have a working interest of approximately 52%.

Current production, net to Berry’s interest, is 9 MMcf/d, with estimated proved natural gas reserves of 87 Bcf. The acquisition also includes approximately 200 miles of a pipeline gathering system and gas compression facilities for delivery into interstate gas lines. Approximately 10% of the value is attributable to the pipeline and compression systems.

“This acquisition will establish another significant core area of growth for the company in the Rockies and adds a large long-life natural gas producing asset to our predominantly oil-based portfolio,” said CEO Robert Heinemann. “We estimate proved developed reserves to be approximately 34 Bcf and believe that development of the assets carries relatively low geologic risk with low development and operating costs.”

Through ongoing development, Heinemann said production from the properties is projected to increase more than 15% a year for the next four years. The focus of the development will be infill drilling to 40-acre spacing. “We expect our capital budget for the properties in 2005 to be in the $4 to $8 million range,” he said. Upon closing, the Bakersfield, CA-based producer’s new company-wide production target for 2005 is in excess of 23,000 boe/d.

The effective date of the transaction is Nov. 1, 2004. Closing of the transaction, which is subject to standard conditions, is expected during the first quarter of 2005. The purchase will be financed by bank borrowings under Berry’s existing credit facility.

©Copyright 2004 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.