Robert Heinemann, president and chief executive officer, stated, "This is a tremendous opportunity for Berry as we diversify our portfolio with another long-lived, low geologic risk natural gas asset that is an excellent entry into the prolific Piceance Basin. We will be the operator and own a 50% working interest in 6,314 gross acres targeting gas in the Williams Fork section of the Mesaverde formation. We anticipate that our full-life finding and development cost will be less than $2.20 per thousand cubic feet (Mcf) and are increasing our 2006 capital budget by an additional $30 million to $190 million to develop this resource. We have two rigs dedicated to this project and based on the productivity of this acreage and surrounding producing operations we estimate that we will prove up significant reserves by the end of 2006. We are seeking to add additional drilling rigs to accelerate development and intend to hedge a portion of our future production from the asset."
The effective date of the transaction is October 1, 2005. Closing is expected by March 1, 2006 and will be funded under the Company's existing credit facility. The completion of the transaction is subject to certain conditions and there is no assurance that all such conditions will be satisfied.
Berry Petroleum Company is a publicly traded independent oil and gas production and exploitation company with its headquarters in Bakersfield, California and a regional office in Denver, Colorado. Since 2003, Berry has added over 1,000,000 acres to its oil and gas asset portfolio with acreage in California, Utah, Colorado, Kansas, Nebraska and North Dakota.
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