The properties are located in Andrews and Gaines Counties in the Permian Basin of west Texas, produce from the Queen and San Andres formations at depths of approximately 4,200 to 4,900 feet, and consist of 25 leases covering 5,360 gross (3,109 net) contiguous acres, with 67 gross (39 net) producing oil wells. Parallel's average working interest and net revenue interest in the acquired properties is 56.6% and 43.8%, respectively.
Reserves and production
The acquired properties have an estimated 2.0 million BOE of proved oil and gas reserves with current production of approximately 200 BOE per day, net to Parallel.
Larry C. Oldham, Parallel's President and CEO, commented, "This acquisition gives us operational control over more than 5,000 acres of underexploited producing leasehold in the Central Basin Platform of the Permian Basin. Exploitation opportunities include well stimulations, infill drilling, waterflood implementation and operational enhancements."
Oldham further stated, "This acquisition is a perfect fit to our 'acquire and exploit' business model and our operational and technical skill sets. It also establishes a new core operating area that is located within 50 miles of the Company's Midland, Texas, headquarters."
In a final comment, Oldham said, "Since September 28, 2004, we have completed three unrelated acquisitions of Permian Basin properties for a total investment of approximately $34.5 million. In total, these acquisitions represent approximately 4.45 million BOE of proved oil and gas reserves at an average acquisition price of $7.75 per BOE, with current production of approximately 560 BOE per day, net to Parallel. We expect these acquisitions to be accretive to earnings and operating cash flow beginning in the fourth quarter 2004."
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