Beta Oil & Gas Inc. of Tulsa, OK, plans to acquire privateoil and gas producer Red River Energy Inc., also of Tulsa, for$23.5 – assuming about $7.6 million of existing debt and issuing2.25 million shares of Beta common stock. The deal is subject toapproval by Beta shareholders.
Properties to be acquired contain estimated proved producingrecoverable reserves totaling 22.5 Bcf of gas and 504,000 barrelsof oil having a net present value, discounted at 10%, of about$23.5 million. The combined companies now have interests in morethan 120 wells in four states, primarily Texas, Louisiana andOklahoma, and operate more than 90% of those same wells.
“While the overall acquisition provides steady cash flow andsignificant recoverable reserves, more specifically, the West HutonLime Unit gives Beta another play with substantial upsidepotential,” said Beta President Steve Antry. “A pilot program isplanned over the course of the next six months which, ifsuccessful, could set-up in excess of 200 developmental future welllocations. On a personal note, I am very much looking forward toworking closely again with Rolf Hufnagel, who will become a Betadirector and continue to run the operating subsidiary. I learned atremendous amount from Rolf when employed by him in the mid-80s atNerco Oil & Gas and am certain he and his team will be a greatasset to the company.”
West Huton holds bout 120 MMBoe of reserves. Overall, Beta’sreserves are more than 60% gas, said Steve Fischer, vice presidentfor capital markets. Beta had two discoveries last year, butFischer said he couldn’t comment on the recently public company’stotal reserves. Employees of Red River will go to work for Beta,Fischer said.
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