Houston-based Cheniere Energy Inc. said its Exploration Group generated, captured and sold 16 prospects on 7,000 acres to a variety of industry partners last year. Cheniere received up-front payments along with retained overrides and carried working interests with no obligation for drilling and development costs. Seven of these prospects were drilled during 2002 resulting in five discoveries. One development well was also drilled successfully in 2002. At year-end, Cheniere’s net reserves from these successful prospects were 2.5 Bcfe, of which 1.3 Bcfe was classified as proved and 1.2 Bcfe as probable. Value of the proved reserves was $5.1 million, and for the combined proved and probable reserves it was $9.4 million. Since the beginning of 2003, Cheniere’s partners have drilled three development wells, adding 0.5 Bcfe of net proved reserves, bringing Cheniere’s total proved and probable reserves to 3.0 Bcfe to date. Cheniere’s partners are planning to drill an additional development well and eight exploratory wells on Cheniere prospects during the year. Cheniere affiliate Gryphon Exploration Co., in which Cheniere owns a 9.3% interest and Warburg Pincus the balance, drilled nine wells in 2002 and had five discoveries. At year-end, Gryphon had proved reserves of 29.7 Bcfe and probable reserves of 9.2 Bcfe. Value of the proved reserves was $106.9 million, and for the combined proved and probable reserves it was $138.8 million. Gryphon expects to drill 14 exploratory wells and three to four development wells in 2003. Its daily production at year-end was 20 MMcfe/day and is expected to rise to 35 MMcfe by the end of the first quarter.

Rapid City, SD-based Black Hills Corp. announced it has completed its acquisition of Denver-based Mallon Resources Corp. in a $53 million transaction, which includes $30.5 million for the October 2002 acquisition of Mallon’s debt and the settlement of outstanding hedges. Under the previously announced agreement, Mallon shareholders received 0.044 of a share of Black Hills common stock for each Mallon share. Mallon’s reserves are located primarily on the Jicarilla Apache Nation in the San Juan Basin of New Mexico and are comprised mostly of natural gas in shallow sand formations. Black Hills said current daily net production from the Mallon properties is approximately 12 MMcfe. Mallon operates 152 of 174 total gas and oil wells, with working interests averaging 90 to 100% in most of the wells and undeveloped acreage. The acquisition will increase Black Hills’ gas and oil production by nearly 50% and more than double proved reserves. Daniel P. Landguth, CEO of Black Hills Corp., said, “As operator of these properties, we intend to launch a drilling and workover program in the near future, through which we expect to realize additional increases in production later this year. We expect the Mallon acquisition to contribute strongly to earnings in 2004 and beyond, as we fully develop the properties.” The acquisition was first announced in the fall of 2002 (see Daily GPI, Oct. 2, 2002).

AGL Resources Inc. said Monday that its board of directors’ audit committee has appointed PricewaterhouseCoopers LLP as the company’s independent auditor, replacing Deloitte & Touche LLP. While noting that the change came as a result of a periodic evaluation process, AGL Resources assured that the decision to change auditors was “not the result of any disagreement between AGL Resources and Deloitte & Touche on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure.” The company added that the decision will be effective for the company’s financial statements for the year ending Dec. 31, 2003.

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