Robert F. Heinemann, president and CEO, stated, "This acquisition will establish another significant core area of growth for the Company in the Rockies and adds a large long-life natural gas producing asset to our predominantly oil-based portfolio. We estimate proved developed reserves to be approximately 34 Bcf and believe that development of the assets carries relatively low geologic risk with low development and operating costs. Through ongoing development, production from the properties is projected to increase more than 15% a year for the next four years. The focus of the development will be infill drilling to 40-acre spacing. We expect our capital budget for the properties in 2005 to be in the $4 to $8 million range. Upon closing, our new Companywide production target for 2005 is in excess of 23,000 barrels of oil equivalent per day."
The effective date of the transaction is November 1, 2004. Closing of the transaction, which is subject to standard conditions, is expected during the first quarter of 2005. The purchase will be financed by bank borrowings under the Company's existing credit facility. J-W Operating Company was advised by Waterous & Co. in this transaction.
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