This transaction follows the acquisition Edge made last year of an approximate 50% non-operated W.I. in the Chapman Ranch Field from three private companies. Edge currently owns working interests ranging from 44% to 50% in 7 producing wells in this field and will be acquiring an additional 44% to 50% W.I. in those same wells, as well as taking over the operatorship of the property.
The acquired properties consist of 9 producing wells (4.9 net) with a net daily production rate attributable to the acquired wells of 3.6 MMcfe, of which about 90% is natural gas. Edge's internal reserve assessment as of December 1, 2006 is approximately 9.2 Bcfe of net proved reserves consisting of 2.8 Bcfe of net proven developed producing and 6.4 Bcfe of net proved undeveloped reserves. Edge has committed to pay $26 million in cash for the acquisition subject to adjustments for operations and other usual purchase price adjustments from the effective date to the closing date. The effective date of the transaction is December 1, 2006 and the anticipated closing date is December 28, 2006.
John W. Elias, Edge's Chairman, President and CEO, commented on the planned transaction saying, "This acquisition gives us operatorship and control over the exploitation and future development of an important asset. We acquired our initial ownership in this field because we believed there was considerable upside potential remaining in the field and surrounding area that we wanted to capture. Our lack of control over the operations made it very difficult for us to exploit the full potential of the property in an acceptable manner. However, in anticipation of our making this purchase, we elected to move forward with a new 3D seismic program over the field and surrounding area. Currently, we estimate there are at least 10 proved undeveloped locations to be drilled plus additional locations that we expect to verify with the new 3D seismic and our 2007 planned drilling program. We expect to fund this transaction from the unused borrowing capacity under our current credit facility which is expected to increase concurrently with this transaction."
Elias went on to note, "Our due diligence and planning related to our previously announced $320 million acquisition from a private party in south and southeast Texas is progressing as we expected and is on schedule for a late January 2007 closing."
Edge Petroleum Corporation is a Houston-based independent energy company that focuses its exploration, production and marketing activities in selected onshore basins in the United States.
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