Calgary-based Viracocha Energy Inc. announced Thursday that it has entered into an agreement to acquire oil and natural gas assets located in Viracocha’s southern Alberta core area for a combined purchase price, including adjustments, of C$22 million.

Closing on the purchase from an undisclosed company is expected to occur on Sept. 30 and is subject to normal closing conditions including rights of first refusal on approximately 35% of the production.

Viracocha estimates production on the properties at 760 boe/d with 60% being gas and 40% being medium gravity oil. The acquisition includes approximately 5,200 acres of undeveloped land in addition to interests in a gas plant, an oil battery, and an extensive gas gathering system.

Viracocha has estimated the reserves at 2.3 million boe, of which 70% is natural gas. Viracocha’s independent engineers, Gilbert Laustsen Jung Associates Ltd., will be commissioned to prepare an independent report for purposes of bank financing.

Viracocha said it has identified optimization, development and exploration opportunities on the properties. In addition, the facilities and gathering system are strategically located in proximity to Viracocha’s current production and undeveloped land base. The company said it anticipates that the acquisition will be funded through bank credit facilities.

The announcement follows another acquisition reported by the company late last week. Viracocha agreed to buy oil and gas assets in southern Alberta for a purchase price, including adjustments, of C$6.7 million. It also expects to close on the properties on Sept. 30.

Production is estimated at 220 boe/d with 70% being light oil and 30% gas. The acquisition includes 5,500 acres of undeveloped land in addition to an oil battery facility, and a gas gathering system. Viracocha has estimated the reserves of the acquisition to 785,000 boe of which 70% is natural gas.

Combined with Viracocha’s current interests in the adjacent lands, Viracocha will now control 100% working interest in the oil pool for purposes of optimizing pool recoveries and the eventual blowdown of the gas cap. The current gas production will be sent to Viracocha’s underutilized gas plant in the area.

Viracocha is engaged in the acquisition, exploration, development and production of oil and natural gas in Western Canada. The company’s operations are focused in southern and east central Alberta with current production of 3,500 boe/d.

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