ONEOK Inc. has purchased 177.2 Bcfe of gas and oil reserves in East Texas with additional probable and potential reserves and related gathering systems from Wagner & Brown Ltd. of Midland, TX, for $240 million.

“Earlier this year, ONEOK closed on the sale of a portion of its producing properties, but stated that its long-term strategy includes owning and controlling reserves,” said CEO David Kyle. “This transaction not only expands the ONEOK footprint, but it reinforces that stated strategy.”

Current net gas production from the properties is 26 MMcfe/d, and ONEOK estimates that the proved reserves yield a reserves-to-production index of 12.4 years and are 91% natural gas.

J. D. Holbird, president of ONEOK Energy Resources, estimated that the purchase price was about $1.27/Mcfe. “We believe these properties will provide further developmental potential consistent with our conservative strategy of acquiring and developing reserves,” he said.

The acquisition is expected to close before year’s end. Initially, the transaction will be financed through short-term borrowings. Longer term, ONEOK may finance this transaction with available cash, the issuance of equity or a combination of both, the company said.

ONEOK is the largest natural gas distributor in Kansas and Oklahoma, and the third largest in Texas, operating as Kansas Gas Service, Oklahoma Natural Gas and Texas Gas Service, serving almost two million customers.

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