Cano Petroleum Makes $24 Million Panhandle Acquisition
Cano Petroleum has closed an acquisition of producing oil and gas properties in the Texas Panhandle Field for a purchase price of $24,000,000.
The acquisition adds approximately 400 net barrels of oil equivalent (BOE) to Cano's daily production and approximately 7 million BOE to Cano's proved reserves, of which approximately 2.1 million BOE are proved producing. The properties cover approximately 9,700 acres and include 2 workover rigs and other equipment valued at approximately $1.25 million. The properties offset existing production and are intended to be incorporated into existing operations without any measurable increase in G&A costs.
The effective date of the acquisition is February 1, 2006 and the acquisition was funded through an existing credit facility with Union Bank of California. As a part of the financing terms, 50% of the newly acquired production will be hedged with a 'floor' at $60 per barrel and $7.60 per mcf during the three year period beginning May 2006. The three year hedge does not have a 'ceiling' which would limit the upside potential in the event that oil prices increase.
Jeff Johnson, Cano's Chairman and CEO stated "This acquisition, at
a cost of $3.25 per BOE of proved reserves, constitutes further
evidence of Cano's ability to identify and target acquisition
opportunities within our core areas which provide excellent
operational synergies, efficient use of existing infrastructure and
personnel, and meaningful reserve and production accretion."