Of the 630 wells, fewer than 200 are currently producing at a rate of between 2.5 to 3 million cubic feet per day. PRB plans to improve production by bringing shut-in wells back to a productive status.
"This transaction should enlarge our revenue base immediately as well as offer PRB significant upside potential as we seek to expand gas volumes for our GAP and Bonepile gathering systems and eventually reactivate as many shut-in wells as possible,” said Robert W. Wright, PRB’s chairman and CEO. “Longer-term, we expect to initiate drilling of approximately 300 Moyer coal-bed methane wells on the newly acquired acreage."
Wright pointed out that the true potential of the acquired assets will take time to assess. “The magnitude and timing of increased gas volumes from the acquired wells are still to be determined, as are the costs associated with well-remediation,” he said. “These are several of the factors that make forecasting difficult at this time. It is our belief that by the end of the third quarter, we will have an understanding of the growth potential of the properties and should be in a far better position to provide updated 2006 guidance."
As previously announced, PRB also has a contract to acquire approximately 70 miles of gathering lines in the Recluse area. The acquisition will give the company gathering opportunities on more than 100,000 acres. “We will also seek out working interests in this area to complement our gathering operations,” noted Wright. “This transaction is scheduled to close in mid-July and will bring additional revenues to our gathering business."
"While we are confident that 2006 will be a year of growth, profitability and opportunity, we are even more confident in the long-term business prospects for PRB and we plan to report on our progress quarterly," Wright concluded.
PRB is an oil and gas exploration and development company operating in the Rocky Mountain States. In addition, the company provides gas gathering, processing, and compression services on properties it operates and for third-party producers.
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