Under this four-year, $46-million contract, which begins on June 1, 2003, Baker Energy and Huber Energy have entered into a collaborative, long-term relationship designed to optimize production and reduce operating costs from the producing, gathering and compression assets in these areas. As Baker is contracted for managing the production and total expenses on these properties, its performance and compensation will be based on the net operations cash flow from the Panhandle and Western Anadarko Fields. This contract represents a significant innovative advancement of Baker's OPCO(R) Consolidation Model.
The producing properties included in this contract have approximately 900 wells, 5 gathering systems with almost 300 miles of gathering lines, 180 compressors, and associated production facilities. Current production is approximately 36 million cubic feet gas equivalent per day.
"This opportunity with Huber Energy represents Baker Energy's first OPCO onshore contract," Dick Giffhorn, president of Baker Energy, said. "Huber and Baker have developed a unique agreement that assures complete financial alignment between the two companies. The level of trust, open communication and focus on the issues will ensure a successful, long-term relationship and optimal performance of these properties." Giffhorn added that Baker is working to identify additional onshore areas of high asset concentration where this unique model can be applied.
"This relationship with Baker Energy is an important initiative as Huber Energy implements our new transaction strategy that will focus on exploitation of acquisitions and grassroots property development. Our previous experience with Baker Energy has produced a highly successful business model that we are confident will be enhanced in this new relationship," Pam Pierce, president of Huber Energy, said.
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