Houston-based Nuevo Energy Co. on Wednesday announced the acquisition of 100 Bcfe of proved reserves — 97% natural gas and associated liquids — for two million shares of its common stock, $62 million in cash and the assumption of $20 million of debt from Athanor Resources Inc., a private company funded primarily by Yorktown Energy Partners. The reserves are located entirely in Terrell County, TX.

The Pakenham Field in Terrell County has current production from the Wolfcamp, Thrusted Wolfcamp and Strawn formations. In the fourth quarter, net production is expected to average 20 MMcfe/d. About 80% of current production is from the shallow Wolfcamp formation, but Nuevo said that a “substantial portion of the future development will be directed toward the deeper, more prolific zones.”

“This acquisition marks the beginning of the second phase of Nuevo’s corporate transformation,” said Jim Payne, Nuevo’s CEO. “It meets all of our strategic criteria in addition to being accretive to earnings and cash flow in 2003. With this transaction, we significantly increased our natural gas production, added higher margin operated properties and established a new core area with attractive development and exploration potential.”

Bryan Lawrence, a partner of Yorktown Energy, said Athanor’s stockholders agreed to take Nuevo’s common stock as part of the purchase consideration “because we believe [in] the company’s articulated business strategy and the stock’s upside potential.”

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