Looking to bolster its core natural gas reserve base in the Southwest, Comstock Resources Inc. announced Wednesday that it has agreed to purchase substantially all of the assets of Ovation Energy, LP. for $62.5 million.

Under the agreement, Frisco, TX-based Comstock will acquire Ovation’s producing properties in the East Texas, Arkoma, Anadarko and San Juan basins, which are expected to contain an estimated 42.7 Bcfe of proved reserves. Comstock said the reserves are 99% natural gas and approximately 66% are in the proved developed category.

The acquisition includes 161 active wells, of which, Comstock will operate 69. The properties are currently producing approximately 7 MMcfe/d. Comstock said it expects the transaction to close and become effective on Oct. 1. Ovation’s divestment program is being handled by Randall & Dewey, global advisors to the oil and natural gas industry

In conjunction with the acquisition, Comstock has also hedged a portion of its natural gas production in 2005 and 2006. The hedges related to the Ovation acquisition are comprised of costless collars covering a monthly volume of 256,000 MMBtu for 2005 and 2006. For 2005, the floor price on a Nymex basis is $4.50 with a ceiling price of $10.30. For 2006, the floor price is $4.50 with a ceiling price of $9.02.

The hedges related to the company’s East Texas drilling program are comprised of costless collars for a monthly volume of 200,000 MMBtus for 2005 and 2006. The floor and ceiling prices for these hedges settle against the first of the month Houston Ship Channel Index price. For 2005, the floor price is $4.50 with a ceiling price of $10.00. For 2006, the floor price is $4.50 with a ceiling price of $8.25.

Comstock Resources is engaged in oil and gas acquisitions, exploration and development primarily in Texas, Louisiana and the Gulf of Mexico.

©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.