Velocity Energy has acquired interests in natural gas wells in West Virginia from a private company. The sale closed on October 2, 2009.
The assets purchased include approximately 13,500 net acres of partially developed oil and gas leases with 91 gas wells with gross production greater than 2000 MCF/D natural gas commingled from several producing zones in the Ravencliff, Maxton, Big Lime, Berea, Gordon and the Cleveland and Huron members of the Devonian Shale. Depending on future commodity prices and development capital, Velocity's management believes that there are greater than 60 proved drilling locations available for development under a farmout agreement entered into with the seller of the assets as well as over 50 other locations available for joint development with the seller under a joint operating agreement. All of these locations would target the Ravencliff, Maxton, Big Lime, Berea, Gordon and Devonian Shale. Production from existing wells on these properties is sold at a premium to the NYMEX natural gas index.
Velocity's President, Don Vandenberg, stated, "We have been pursuing this acquisition and other Appalachian acquisitions as we believe that the long history of successful exploitation of Devonian Shale and other shale horizons (Marcellus, Rhienstreet, and Java) found throughout the region in Appalachia is the best place to position the Company, as a profitable aggregator, of long-lived oil and gas reserves. In addition, our developmental drilling program will give the Company the added benefit of the increased opportunity to utilize our drilling rigs."
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