CWEI estimates that Southwest's assets include 177 Bcfe of proved oil and gas reserves (62% proved developed) as of March 31, 2004 (58% oil and 42% gas). Current production is approximately 29 MMcfe per day. Substantially all of Southwest's assets are located in the Permian Basin. CWEI has identified an additional 53 Bcfe of probable reserves.
The stock purchase will include working capital, and certain other assets and liabilities of Southwest and is subject to approval by Southwest shareholders. The amount of cash consideration at closing is estimated to be $187.8 million, which is $1.06 per Mcfe of proved reserves and $.82 per Mcfe for both proved and probable reserves. CWEI intends to finance the acquisition through a new financing package provided by Bank One N.A. and plans to reduce its increased leverage within 12-18 months.
Clayton W. Williams Jr., chairman, president and CEO of CWEI, stated, "We believe this acquisition represents a tremendous opportunity for our Company. Southwest's extensive inventory of low-risk exploitation opportunities complements CWEI's exploration focus providing a more balanced drilling portfolio for CWEI. This acquisition increases our opportunities in the Permian Basin and substantially increases and diversifies CWEI's reserve profile."
Most Popular Articles