With the acquisition, the Company also expanded its gas gathering arrangements with Duke Energy Gas Services Corporation. NGAS already delivers natural gas production from its Straight Creek Field to Duke's gathering system in southeastern Kentucky. Production from the acquired acreage, currently around 2,700 Mcfe per day, will also be dedicated to Duke's system.
"This acquisition is a major part of our long-term strategic plan for continuing growth," said William S. Daugherty, President and CEO of NGAS. "The acquired acreage, along with 14,000 gross (approximately 7,600 net) acres of leases we recently acquired in Leslie and Bell Counties, Kentucky, extends our acreage position in the Appalachian Basin to over 250,000 gross (170,000 net) acres. It boosts our current net daily production to approximately 6,000 Mcfe per day from 570 wells we now operate in the region and expands our proved oil and gas reserves to approximately 61.5 Bcfe, not including 2004 reserve adjustments. The transaction also gives us greater throughput to major natural gas markets serviced through Duke's system and strengthens our competitive position in the region."
As part of the acquisition, DPI added eight SME employees to its staff and assumed certain SME obligations, including future obligations under its oil and gas leases, farm-out arrangements and operating agreements. No SME debt was assumed in the transaction. The reserve figures for the acquired properties were estimated by Wright and Company, a petroleum engineering firm located in Houston and Nashville that has compiled NGAS' reserves for the past six years.
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