Resolute Energy Corporation acquires oil production and acreage expands Permian Basin operations
Tuesday, Dec 04, 2012
DENVER, Dec. 3, 2012 /PRNewswire/ -- Resolute Energy Corporation ("Resolute" or the "Company") (NYSE: REN) announced today that it has entered into a definitive agreement to acquire oil assets, including existing production and undeveloped acreage, in the Permian Basin of Texas and southeast New Mexico from a private party for a purchase price of approximately $120 million.
The transaction is expected to close on or about December 21, 2012.
The Company expects to finance the acquisition with debt. The transaction has an effective date of August 1, 2012, and is subject to customary conditions and purchase price adjustments.
The assets are primarily located in Howard County, Texas, and Lea County, New Mexico. Combined, the acquired properties produced a net 1,418 barrels of oil equivalent ("Boe") per day in the third quarter of 2012 and had estimated proved reserves of 4.1 million Boe, of which 73% is crude oil. The Company believes that there may be significant additional resource potential in excess of the reserves currently categorized as proved.
Howard County, Texas
The Howard County assets include non-operated working interests of approximately 39%, consisting of 1,310 net acres primarily targeting the Wolfberry play. The 23 existing wells produced a net 377 Boe per day in the third quarter of 2012, approximately 64% of which was crude oil.
This acreage is approximately six miles from the Company's existing operations in Howard and Martin counties.
Growth potential exists from approximately 64 vertical drilling locations targeting the Wolfberry interval and 66 recompletion opportunities that are not categorized as proved. Other upside exists from the multi-pay, multi-play nature of the area, which is prospective for horizontal development in the Wolfcamp and Cline.
The acreage is largely held by production, and the Company estimates that a one-rig program for two years will hold all of the acquired leases.
Lea County, New Mexico.
The primary asset acquired in Lea County is Denton Field, which was discovered in the 1950s and is a conventional fractured carbonate reservoir. The assets include 2,767 net acres (2,880 gross), all of which are held by production, and in the third quarter of 2012 the 39 existing wells produced a net 833 Boe per day. Approximately 89% of production consisted of crude oil. Resolute will be the operator of the Lea County assets.
Growth potential and upside exists from activities associated primarily with the deepening of existing wells and infill drilling from 40-acre to 20-acre spacing.
SOURCE Resolute Energy Corporation
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