The Fuhrman-Mascho prospect, located in Andrews County, Texas, is the fifth acquisition by the company of a Permian Basin property located in this geographic area in the past 18 months. The property consists of 11,300 acres, 136 producing wells and net production of approximately 230 BOE per day. Arena will be the operator and have a 100% working interest and 75% net revenue interest. Management believes, based on its review of the property to be acquired and its experience in this geographic area, that there are substantial future development and exploitation enhancement opportunities available. The transaction is subject to certain closing conditions and is expected to close on or before Dec. 20, 2004, with an effective date of Dec. 1, 2004.
Lee Keeling & Associates Inc., an independent reservoir engineering firm, has reviewed Arena's estimates that the property to be acquired represents approximately 6,500,000 BOE (91% oil) of proved reserves net to Arena's interest including an estimated 130 proved undeveloped locations. Additionally, Arena has acquired through this acquisition the rights to the Yates gas formation covering more than 9,000 acres which management is currently evaluating for future development and exploration opportunities.
The company plans to finance $9.0 million of the planned acquisition through borrowings under its bank credit line which was recently increased to $25 million with an immediate borrowing base of $15 million.
Tim Rochford, president and CEO of Arena, stated, "This acquisition represents our largest to date in cost and, more importantly, in available development and exploitation opportunities. It also adds to our core Permian Basin properties base in West Texas and New Mexico and now gives us five properties in close proximity to our recently opened Hobbs, N.M., office. This acquisition should greatly contribute to our reserves and production growth in this area."
Most Popular Articles