The combined total proved reserves of the two acquisitions, as of December 31, 2006, are estimated to be 9.7 million barrels of oil equivalent (MMBOE), and proved plus unproved conventional reserves are estimated to be 14.7 MMBOE. Conventional reserves do not include reserves from tertiary recovery methods. The combined net acquisition costs at closing are estimated to be approximately $106 million.
"These fit our strategy to acquire fields in our core areas that have proven reserves, but also excellent potential for growth," said Bill Schneider, President of Venoco. "We are very excited about the similarities between the Manvel field and our Hastings field. Since we acquired Hastings last year, we have completed over 100 workovers in the field, increased production in excess of 35% and added approximately 3 MMBOE to proved reserves.
"We see the same type of potential in the Manvel field, particularly since both produce from Frio sands and are very similar geologically. Initially we plan to return idle wells to production, enhance the lift systems and make facilities upgrades. We believe this work has a strong probability of yielding results similar to our work in the Hastings field -- increased daily production and increased proven reserves. Studies may also show Manvel to be a good candidate for CO2 flooding."
Schneider continued, "In California, we really like the potential we see in the West Montalvo field. There is a significant amount of oil in place (243 MMBO), with only 10% recovered. This is the type of field that Venoco has successfully re-engineered to capture additional reserves.
"This field was discovered in 1951 and has seen limited capital in the last decade. In addition to the fee leasehold, the field includes a largely undeveloped offshore portion that is under lease from the State of California, but from a technological standpoint, is easily reachable from onshore locations."
The potential impact of the two, separate acquisitions, based on anticipated closing dates, should add over 500 barrels of oil equivalent (BOE) to Venoco's 2007 annual average net daily production. The $106 million acquisition price implies an acquisition cost of approximately $11.00 per proved BOE.
There are approximately 75 wells in the combined acquisitions. Closing of each transaction is subject to the satisfaction of customary conditions.
Venoco is an independent energy company primarily engaged in the acquisition, exploitation and development of oil and natural gas properties in California and Texas. It has headquarters in Denver, Colorado and regional offices in Carpinteria, California and Houston, Texas. Venoco operates three offshore platforms in the Santa Barbara Channel, has non-operated interests in three other platforms, operates two onshore properties in Southern California, has extensive operations in Northern California's Sacramento Basin and operates twelve fields in the Texas Gulf Coast and South Texas.
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