Berry Petroleum has entered into an agreement with a private seller to acquire interests in producing properties principally in the Wolfberry trend in West Texas for approximately $126 million in cash. Berry's proved reserve estimates associated with the properties are 11.2 million barrels of oil equivalent (MMBOE), 92% of which are in the Wolfberry, 85% of which are oil reserves and 23% of which are proved developed reserves. In 2010, the acquisition is expected to add approximately thirteen hundred barrels of oil equivalent per day (MBOE/d) to Berry's production on a twelve month annual average. Berry has identified over 130 drilling locations in the Wolfberry trend targeting the Spraberry, Dean, Wolfcamp and Strawn formations.
Robert Heinemann, president and chief executive officer, stated, "This acquisition provides Berry with the opportunity to diversify its oil resources and add a high margin, scalable oil resource to our portfolio. We believe the Wolfberry is an excellent fit with Berry's engineering and execution competencies and complements our existing stable base of low geologic risk oil assets. We will be the operator of 70% of the acquired properties and plan to transition a new West Texas focused asset team over the coming months."
Berry is increasing its 2010 capital budget by an additional $30 million to range between $250 million and $290 million. The Company plans to drill approximately 27 wells on the Permian property and plans to fund the capital from internally generated cash flow. One rig is currently drilling and Berry expects the acquired properties to provide self-funded production growth over the coming years.
Berry expects its 2010 production to be between 32,250 and 33,000 BOED, an increase of 8% to 10% over 2009. In addition, Berry's production from oil assets is expected to grow 20% by year-end 2010 driven by Diatomite and Wolfberry development.
The effective date of the transaction is January 1, 2010. Closing is expected in March 2010. The transaction is subject to customary closing conditions.
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