On the acquired properties, NGAS has a 25% non-operating interest in 48 gross producing wells, 19 PUD locations and 13 probable locations. In addition, as part of this transaction, NGAS Resources also acquired a 25% interest in the gathering system servicing the project area.
The total purchase price of the assets was $11.4 million. NGAS funded the purchase with a portion of the proceeds from its recent convertible note financing.
"This transaction represents yet another affirmation of our acquisition strategy of purchasing quality producing properties which offer significant upside to our portfolio and provide development drilling opportunities," commented William S. Daugherty, President and CEO of NGAS Resources. "While we remain focused on our Appalachian Basin assets, strategic acquisitions outside our core area will enable NGAS to continue increasing production and proven reserves. This transaction is very well suited to our strategy and our long-term growth plans." Added Mr. Daugherty, "Although the Arkoma Basin represents a new area for NGAS, the project is an excellent fit with our existing expertise."
Reserve and production highlights include the following estimates:
Highlights of the gathering system:
The transaction closed December 30, 2005, with an effective date of November 1, 2005. Subsequent to the effective date, NGAS has successfully drilled three additional wells, one PUD and two probable locations. A fourth well on a probable location is currently being drilled, and during 2006, the Company plans to participate in the drilling of at least one well per month to continue development of the CBM project in the Hartshorne coal formation.
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