Denver-based Mallon Resources Corp. has completed the sale of its Delaware Basin oil and gas properties to Irving, TX-based Magnum Hunter Resources Inc. Mallon said the sale included its interest in 23 fields, consisting of interests in 141 producing wells and 13,742 net mineral acres. Magnum Hunter entered into a purchase and sale agreement with Mallon in mid-August for the acquisition of Mallon’s Delaware Basin oil and natural gas reserves and related assets located in Eddy and Lee counties of southeast New Mexico (see Daily GPI, Aug. 14).

The adjusted purchase price was approximately $31.3 million. Mallon said it applied approximately $24 million of the proceeds to reduce its debt to Aquila Energy Capital Corp. by approximately 47%.

It is anticipated that Magnum Hunter’s subsidiary, Gruy Petroleum Management Co., will become the operator of 59 of the 141 producing wells. Magnum Hunter reported that approximately 73% of the proved reserves are natural gas, with the remainder being oil. As of Dec. 31, 2000 these properties had proved reserves of 41.8 Bcfe.

With the sale of the properties, Mallon also revised its production outlook going forward. The company reported that its production for third quarter 2001 is expected to be between approximately 1.65 and 1.75 Bcfe, and it believes its production during the fourth quarter will be between approximately 1.25 and 1.35 Bcfe. The company’s production in the first half of 2001 was approximately 3.4 Bcfe. Mallon said it expects its total 2001 production will be between 6.3 and 6.5 Bcfe.

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