To infuse more money into exploration, Denver-based Whiting Oil and Gas Corp. has acquired all of the limited partnership interests managed by subsidiary Whiting Programs Inc. for $30.5 million. The properties, located in Louisiana, Texas, Arkansas, Oklahoma and Wyoming, hold approximately 17.4 Bcfe, 62% of which is crude oil, which translates to an acquisition cost of $1.75/Mcfe.
Current production is 4 MMcfe/d. Whiting Oil, a subsidiary of Whiting Petroleum Corp., said the sale is effective Jan. 1, 2005, and has been adjusted for year-to-date production. Whiting funded the acquisition using cash on hand.
“This is an attractive acquisition for Whiting,” said CEO James J. Volker. “The properties have moderate production decline rates and contain long-lived reserves. We expect strong net after-tax cash flow and margins from these properties comparable to our first quarter 2005 net margins (i.e., $3.70-3.80/Mcfe after all cash costs).”
Under the terms of the partnership agreements, after the investment of their initial capital in the early 1990s, the partnerships have not had capital for drilling. Historically, drilling opportunities were farmed out. Now that Whiting owns 100% of the partnerships, the partnerships’ working interests will be assigned to Whiting Oil and Gas, which will continue to evaluate the properties for proved and nonproved reserves drilling potential.
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