Houston-based EV Energy Partners LP (EVEP) agreed to pay multiple sellers a combined $202.7 million for a set of natural gas-weighted properties in the San Juan Basin, Midcontinent, Texas and West Virginia. Estimated total proved reserves are 88 Bcfe, and daily production is averaging 12.9 MMcfe/d.
More than 440 producing wells are included, and the properties are 94% proved developed. The assets combined are 58% weighted to gas, 18% to oil and 24% to natural gas liquids (NGL). The reserves-to-production ratio average is 18.7 years.
The largest transaction is with EnerVest Ltd., said EVEP.
In the first transaction, EVEP agreed to pay EnerVest $142.1 million to acquire some San Juan Basin assets, in which EnerVest holds a 77% average working stake. Proved reserves are estimated at 65.5 Bcfe, and 85% are proved developed. Current production averages 9.1 MMcfe/d, weighted 58% to gas. The properties have 170 producing wells, and 84% are operated.
The West Virginia assets, also to be acquired from EnerVest for $5.8 million, include proved reserves estimated at 2.3 Bcfe. Current production from 86 wells averages 380 Mcfe/d. Production is 100% weighted to gas and 75% is operated. EnerVest has an average 84% stake in the properties. The reserves-to-production ratio is 16.2 years.
The Midcontinent package. which EVEP agreed to acquire from EnCap Investments LP for $38.8 million, includes properties in Oklahoma, the Texas Panhandle and Kansas. Proved reserves are estimated at 13.7 Bcfe and are 100% proved developed. Average production from 128 producing wells is 2.8 MMcfe/d, weighted 78% to gas. EnCap holds a 65% average working interest in the assets.
An undisclosed seller also agreed to sell a 100% operated leasehold located in Eastland County, TX, for $16 million. Estimated proved reserves are 6.5 Bcfe; the properties are 72% proved developed. Current output from 58 wells averages 600 Mcfe/d, which is 90% weighted to oil.
EVEP, which expects to close the transactions by mid-September, plans to finance them with debt. EnerVest would receive a share of the net proceeds, estimated to be around $35 million, in EVEP common units with the balance in cash. A portion of the expected proved developed producing production also is to be hedged through 2012, EVEP said.
EVEP Tuesday reported a net loss of $99.5 million (minus $6.51/unit) in 2Q2008. The loss included $118.1 million of unrealized losses on commodity hedges, and an $800,000 loss based on compensation costs. In the same period of 2007 EVEP reported earnings of $12 million (93 cents/unit).
Production in 2Q2008 rose 104% to 4.8 Bcfe from 2.35 Bcfe in 2Q2007. Output in the latest period included 3.4 Bcf of natural gas, 97,000 bbl of crude oil and 135,000 of NGL, EVEP said.
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