The properties to be purchased are located in Denton and Wise counties, in the heart of the prolific Barnett Shale in the North Texas Fort Worth Basin. The properties provide Dune with significant production, and high-impact, low-risk extensional drilling opportunities, and establishes a third core producing area for the Company.
Alan Gaines, Chairman and CEO of Dune, stated, "This is a watershed event for Dune. This highly accretive acquisition will greatly expand both our production and inventory of drilling locations. We will continue our efforts to identify additional opportunities for growth, as well as focus on organic growth relating to our existing Welder Ranch and Pearsall projects."
Dr. Amiel David, President and Chief Operating Officer, commented, "The production and drilling activity in the Barnett Shale will balance our present exploration and development efforts, and extend our operating reach well beyond South Texas."
Dune intends to finance the acquisition through a combination of cash, debt and equity. The Company anticipates utilizing derivatives in the form of swaps or costless collars covering a portion of projected production from proved developed reserves for the coming two to three years.
Houston, Texas-based Sanders Morris Harris Inc. is acting as financial advisor/investment banker to the Company for this transaction.
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