"Our strategy for investment in the Barnett Shale reflects our commitment to low operational risk and healthy economic returns. Peak Energy offers XTO the opportunity to invest in the best non-core areas of the play where we anticipate the greatest potential," stated Bob R. Simpson, Chairman and Chief Executive Officer. "About 30% of the Peak Energy acreage is held-by-production with no lease expiration risk and, in total, expands our holdings to almost 200,000 net acres across the Barnett Shale play. Importantly, we have hand-picked our properties where drilling and economic results favor long-term development."
"As in all of our regions, we continue to build out positions based on reservoir quality, production characteristics and attractive returns. The Peak Energy purchase provides us with solid drilling acreage based on our technical assessment of well performance to date," said Keith A. Hutton, President. "The leasehold is primarily located in a thick section of the shale reservoir, ranging from 200 feet to 250 feet, and at a shallow average drilling depth of 4,600 feet. Per-well reserves may be less than those in the Core Area, but the gas composition is 25% richer, yielding price realizations $1 to $1.50 per Mcf higher than the Core. A well-designed infrastructure to handle gas production and water disposal is already in place. In addition, new pipelines are under construction to accommodate future development. XTO currently plans to drill 300 wells on the Peak properties and looks to expand further with 50-acre drilling locations in select areas."
This transaction is expected to close on June 30, 2006. The booked acquisition cost will include customary non-cash adjustments, including a step-up for deferred income taxes. Lehman Brothers acted as the financial advisor to Peak Energy.
XTO Energy Inc. is a domestic natural gas producer engaged in the acquisition, exploitation and development of quality, long-lived oil and natural gas properties in the United States. Its properties are concentrated in Texas, New Mexico, Arkansas, Oklahoma, Kansas, Wyoming, Colorado, Alaska, Utah, Louisiana and Mississippi.
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