El Paso Adds Acreage in South Texas
El Paso Corporation's wholly owned subsidiary, El Paso Exploration & Production Company, reported Friday that it has agreed to acquire producing properties and undeveloped acreage in Zapata County, Texas, for approximately $255 million. The properties complement El Paso's existing Texas Gulf Coast operations and provide a re-entry into the Lobo trend.
The assets being acquired have current net production of approximately 19 million cubic feet equivalent per day, and El Paso estimates proved reserves to be approximately 84 billion cubic feet equivalent. Approximately 73 percent of the estimated proved reserves are undeveloped. The properties are 100 percent operated with an average working interest of 85 percent. The 27,000 gross (23,000 net) acres to be acquired in the transaction provide a multi-year drilling inventory with significant additional exploration and development drilling opportunities. In addition, these properties are in close proximity to El Paso's existing operations in the Bob West field in Zapata County, facilitating assimilation into El Paso's Texas Gulf Coast operations.
El Paso has executed purchase and sale agreements to acquire Laredo Energy III, LP, operator and majority owner of the properties, as well as separate working interests in some of the properties. The acquisition is expected to close in January 2007 and is subject to customary due diligence.
El Paso Corporation provides natural gas and related energy products. The company owns North America's largest natural gas pipeline system and one of North America's largest independent natural gas producers.
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