Vanguard Natural Resources to Bet on Natural Gas in 2014

Vanguard Natural Resources LLC’s recent $581 million acquisition of mostly natural gas properties in Southwestern Wyoming has increased its enterprise size by 20 percent, remarked Scott Smith, president and CEO of the company in last week’s conference call.

“At closing, our reserves will increase approximately 80 percent and our daily production will increase approximately 55 percent,” he added. “Based on our current estimates with the addition of this acquisition, we are forecasting approximately $90 million will be added to our 2014 capital budget.”

The natural gas and oil properties are for the Pinedale and Jonah fields of Southwestern Wyoming and are spread out over 87,000 gross acres and currently produce 18,900 barrels of oil equivalents per day. The assets are mostly natural gas and natural gas liquids (NGLs) at around 80 percent and 16 percent respectively, with about 4 percent of the production being oil. The company’s reserves will boost to roughly 847 billions of cubic feet equivalent or 80 percent with an estimated reserve life of 20 years.

Furthermore, Vanguard is acquiring about 2,000 producing wells with over 970 proved undeveloped drilling locations, with an additional 5,200 locations not being booked due to the Securities Exchange Commission five-year rule, Smith added.  

Vanguard intends to hedge the expected natural gas and oil production from these assets through 2017, at a rate of 70 and 90 percent, noted Richard Robert, chief financial officer and executive vice president and secretary of Vanguard Natural Resources, in the conference call.

The company acquired the assets from Anadarko E&P Onshore LLC, a subsidiary of Anadarko Petroleum, according to the filed 8-K.


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