Forest has entered into a definitive agreement with a private entity to acquire producing assets including approximately 69,000 gross acres (47,000 net acres) primarily in its core Ark-La-Tex area. Forest attributes estimated proved reserves of 110 Bcfe (45% proved developed) to the properties which produced an average of approximately 13 MMcfe/d in 2007.
Forest has identified more than 500 additional vertical and horizontal drilling locations on the properties included in the acquisition primarily in the Cotton Valley and Travis Peak intervals. Forest will pay approximately $285 million cash for the assets, subject to customary adjustments tied to an economic effective date of March 1, 2008, and intends to fund the acquisition using its credit facility and cash on hand.
Craig Clark, Forest's President and Chief Executive Officer, stated, "This negotiated transaction adds significant acreage and drilling opportunities to our sizeable presence in the Ark-La-Tex area. Forest had little activity in this area two years ago, but it has been the fastest growing area within the Company recently. The acquisition nearly doubles our East Texas / North Louisiana leasehold to over 140,000 gross acres. Our near term work will focus on the Cotton Valley and Travis Peak intervals, both vertically and horizontally. Additionally, we may have opportunities in the Bossier / Haynesville Shale and James Lime. This is an excellent bolt on acquisition for our Eastern Business Unit." Forest intends to update 2008 guidance when the acquisition is closed. The acquisition is scheduled to close in the second quarter of 2008 and is subject to customary closing conditions and adjustments.
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