XTO Energy Inc. has entered into a definitive agreement to acquire producing properties, leasehold acreage and infrastructure from Linn Energy, LLC for $600 million. The purchase includes 152,000 net acres of Marcellus Shale leasehold in western Pennsylvania and West Virginia. XTO Energy's internal engineers estimate proved reserves on the properties to be 145 billion cubic feet equivalent (Bcfe), from the shallow Mississippian and Devonian reservoirs. Upon closing, the acquisition will add 25 million net cubic feet of natural gas equivalent (MMcfe) per day to the Company's growing production base. The pipeline and gathering infrastructure included in the purchase is valued at about $50 million.
"This acquisition provides XTO an ideal opportunity to stake a foothold in the emerging Marcellus Shale play of the Appalachian region," stated Bob R. Simpson, Chairman and Chief Executive Officer. "The expansive leasehold is anchored in the right locations, where we anticipate prolific shale potential. The producing properties generate free cash flow which we will deploy in our shale development campaign. Also, the operational team already in place brings the experience, expertise and manpower to support XTO's long-term commitment to the basin."
"Our confidence in the Marcellus Shale is based on several key factors: a rigorous evaluation of the geology and its associated resource, the horizontal and vertical well results from multiple operators and our ability to expedite the pipeline infrastructure needed to re-develop the region," noted Keith A. Hutton, President. "From our technical perspective, the Marcellus Shale resembles the Fayetteville Shale, containing similar natural gas in place potential and comparable producing metrics. By applying our horizontal drilling and completion techniques, we anticipate average well reserves to be greater than 2 Bcfe with initial producing rates of 2 to 3 MMcfe per day. Given this framework, the properties could hold 2 to 4 Tcfe of resource potential."
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