Houston Exploration Closes Acquisition of GoM Assets

The Houston Exploration Company has closed on two previously announced transactions for producing properties in the shallow waters of the Gulf of Mexico from Orca Energy, L.P. and from BP Exploration & Production Inc.

The combined purchase price of both transactions totaled $145 million for 79 billion cubic feet of natural gas equivalent (Bcfe). The assets are more than 80 percent natural gas and encompass 14 fields that are near the company's existing operations in the Gulf of Mexico.

The asset package from BP Exploration & Production Inc. closed on September 30, 2004, while the asset package from Orca Energy, L.P. closed today. Both transactions had an effective date of August 1, 2004. After expected closing adjustments from the effective date of the acquisitions, the combined purchase price will be adjusted to approximately $139 million. Houston Exploration funded the transactions with a combination of cash on hand at the time of closing and debt from its revolving bank credit facility. In addition, as a result of the acquisitions, the company's banking group has increased the available borrowing capacity for the organization by $60 million to $400 million from $340 million.