Momentum has entered into a purchase and sale agreement with Newfield to acquire certain South Texas oil and gas properties in Fashing Field in Atascosa and Karnes Counties Texas for an undisclosed amount. The effective date of the transaction is April 1, 2011. Closing is anticipated on June 30, 2011 following a customary due diligence period.
Fashing Field is the largest Edwards gas discovery in Texas with over 1.2 trillion cubic feet of natural gas produced since inception in 1957. The acquisition of approximately 5,000 net acres makes Momentum the largest asset holder in the field. Momentum is acquiring all of Newfield's interests below the top of the Georgetown formation at approximately 9,700', including the Edwards, Georgetown, and Pearsall Shale formations.
The properties consist of interests in 60 wells with current net production of approximately 3.8 million cubic feet of gas equivalent per day, approximately 6% of which is condensate and 9% of which is natural gas liquids. Momentum will operate 16 wells with 100% working interest. The remaining wells are operated by a third party with Momentum acquiring an approximately 47% working interest. Momentum has identified a number of proved, probable and possible work-over and drilling candidates to enhance production.
Greg Davis, Vice President at Kayne Anderson, had these commented, "This is a great start to Momentum's acquisition strategy. These assets provide Momentum with a stable base of long-life gas production and a solid inventory of development projects."
Momentum's President, Loren Long, added, "Fashing Field is the crown jewel of the Edwards play in South Texas. There is a significant amount of hydrocarbons remaining, even beyond the proved reserves. It has been 15 years since the last well was drilled and completed in the lower Edwards. There have been numerous enhancements in drilling and completion techniques since that time, and we're putting together the right combination of asset, team and technology to create value."
The source of funding for the acquisition will be a combination of equity from Kayne Anderson and the management team and debt from Momentum's recently announced credit agreement with BNP Paribas, Union Bank, and Bank of Texas.
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