Houston Exploration Completes Acquisition
Houston Exploration acquired producing and undeveloped properties with approximately 85 Bcfe of net proved reserves and 28,000 gross acres located in Webb and Zapata counties in South Texas. The properties include interests in 159 wells and represent an approximate 60% increase to the Company's existing South Texas reserve base and a 15% increase to the Company's total proved reserve base as of 562 Bcfe at December 31, 2000.
Chairman of the Board, Robert B. Catell, stated, "This acquisition is consistent with our strategy to provide shareholders with meaningful growth in the Company's asset base in a transaction which is immediately accretive to earnings. The ability to utilize our knowledge in core areas and generate upside potential from operations is a very effective way to provide Houston Exploration and its shareholders with growth opportunities."
The properties are producing at net rates of approximately 21 MMcfe/d representing a reserve to production life of approximately 11 years. The Company has currently identified an estimated 26 additional drilling locations and has included drilling of at least 7 wells into its 2002 planned capital expenditures. The new properties double the region's acreage position and are adjacent to existing production and operations in the Charco Field and require virtually no additional personnel.
"We are pleased to have the addition of these South Texas properties in one of our core operating areas," said William G. Hargett, President and Chief Executive Officer. "Our expertise of the area and ability to maintain low cost operations is a strong reflection of our operating strategy and acquisition criteria. Our knowledge of the area combined with the 1,200 square miles of 3-D geophysical data provides our geo-science professionals with tools to further improve our success rates."
Houston Exploration acquired properties in the Charco Field of South Texas in 1996. Original production rates averaged 38 MMcfe/d. To date the Company has completed 115 successful wells and increased production to a current average rate of 105 MMcfe/d.