Berry and its partners will develop a plan to test the total acreage and Berry will operate the shallow horizons down to approximately 6,500 feet. Berry's ownership will be up to 75% in these zones. Natural gas potential will be the focus of the deeper horizons, primarily in the Wasatch and Mesaverde sections, and Berry will participate up to 25% in the development of these deeper zones. The Ute Indian Tribe plans to participate in both the shallow and deep programs with a working interest of 25%.
Heinemann continued, "This acquisition is an excellent strategic fit as it builds on our Brundage Canyon asset and leverages our capabilities. It increases the potential for the discovery of additional light oil and natural gas in our core area and enhances our ongoing relationship with the Ute Tribe. We believe this joint development will be very significant for our Company."
Michael Duginski, senior vice president of Corporate Development, stated, "With this acquisition, we have clearly strengthened our diversification into the Rockies. The initial drilling program will begin in 2004 and we expect a significant increase in drilling in 2005. A successful development program could make this a legacy asset for Berry."
Logan Magruder, senior vice president of the Rocky Mountain and Mid-Continent Region, added, "We are fortunate to make an acquisition adjacent to our existing operation. We believe the horizons we are targeting in the shallow development will be a continuation of our productive Green River zones on the Brundage Canyon property. This joint development on an additional 171,000 acres enables us to position the Company for growth in a natural gas prone area."
The effective date of the transaction is July 13, 2004. The completion of the transaction, which is expected in the third quarter of 2004, is subject to certain conditions and approvals and there are no assurances that all such conditions will be satisfied.
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