"This is a step towards building a meaningful position for Fortuna in the United States," said Dr. Jim Buckee, President and Chief Executive Officer of Talisman. "We are excited by the prospectivity of the Trenton-Black River play and have identified a sizeable number of drilling locations in the area. Drilling success on this acreage could lead to double-digit production growth rates. With low operating costs, a premium to NYMEX prices and proximity to infrastructure, this is a very attractive, high netback area.
"We have already hedged gas prices on the majority of an equivalent volume of the acquired production for 18 months and will shortly increase this to cover total volumes. Including these hedges, the acquisition is expected to be accretive to earnings and add about C$0.80 to Talisman's cash flow per share this year. With in excess of 4.8 million shares repurchased since October 31, 2002 and the addition of these producing assets, Talisman should comfortably beat its 2003 target of 5% production per share growth, post Sudan."
In these transactions, Fortuna has acquired approximately 150,000 net acres of land (mostly 100% working interest), 115 bcf of proved gas reserves and 55 mmcf/d of production (reserves and production are before royalty interests). After adjusting for the value of land, seismic and tax pools, the acquisition cost of these proved reserves is approximately US$1.40/mcf.
Including the Fairman acquisition announced in November 2002, Fortuna now has 400,000 net acres of land in the Watkins Glen area of New York State, with current production of approximately 65 mmcf/d. Fortuna plans to spend US$45 million in 2003, drilling up to 10 wells, shooting seismic and adding to existing infrastructure.
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