MarkWest Acquires Two Canadian Natural Gas Production Companies
MarkWest Hydrocarbon, Inc. has acquired two privately owned independent exploration and production companies: Leland Energy Canada Ltd. and Watford Energy Ltd., both headquartered in Calgary, Alberta, Canada for US $51 million.
The same management directs both companies and will remain in place and continue to operate as before the transaction.
The two entities will add 15,000 Mcf per day and 190 barrels of oil per day to MarkWest's current net production of 6,100 Mcf per day. The reserve report on the Canadian entities by Gilbert Laustsen Jung Associates indicates net acquired proved reserves of 26.4 billion cubic feet equivalent (Bcfe), which will increase MarkWest's total net proved reserves to more than 63 Bcfe. The current present value discounted at 10 percent of the acquired companies' proved reserves is $47 million, while MarkWest's PV10 prior to this transaction was $36 million.
Importantly, the acquisition adds more than 300 drillable locations,
mostly defined by 3D seismic. The Canadian companies' net land base is more than 106,000 acres, with 80 percent being highly exploitable. The acreage is located in central and southern Alberta and has excellent year-round access. The existing wells are approximately 3,500 feet deep, with relatively high initial production and a reserve life of five to seven years. 3D seismic, scheduled for late 2001, is anticipated to provide many additional drillable locations. The capital expenditure budget is expected to exceed $40 million over the next 24 months.