Rapid City, SD-based Black Hills Corp. Wednesday completed its $24.1 million acquisition of third party ownership interests and leases associated with the property it had acquired last March from Koch Exploration Co. in Colorado’s Piceance Basin. For the rest of this year, the company’s CEO said it will focus on increasing production from existing wells, holding off drilling new wells until next year.
Black Hills said the acquisition included about 22.4 Bcfe of proven reserves, of which 17.9 Bcfe are proved undeveloped reserves. Current annual net production from the assets is slightly less than 500 MMcfe, according the company.
Also as part of the deal, Black Hills has acquired rights to more than 15,000 net acres of undeveloped leaseholds adjacent or near existing operations in the Piceance Basin. The company’s overall leasehold position in the Piceance is about 73,000 net acres.
For 2006 thus far Black Hills CEO David Emery said the company has acquired 62 Bcf of natural gas reserves and 46,000 net acres of leasehold in Colorado, most of which is undeveloped. “The most recent acquisition permits us to further consolidate our exploration and production activity in the Piceance Basin,” Emery said.
While earnings were down compared to the second quarter last year, Black Hills reported last month that overall in the second quarter oil and gas production increased 6%, with natural gas production jumping 10%, offset by an 8% decline in oil production.
“The expansion and concentration of assets [in Piceance] is expected to improve our operating efficiency and management of capital deployment,” Emery said. “We continue to make progress on planning a multi-year drilling and development program.”
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