EV to Acquire Texas Properties from Anadarko
EV Energy Partners, L.P., along with certain institutional partnerships managed by EnerVest Management Partners, Ltd., has signed an agreement to acquire oil and natural gas properties in Central and East Texas from Anadarko Petroleum Corp. EVEP will acquire an interest in these assets for $100 million.
The acquisition, which has been approved by the Board of Directors, is expected to close by the end of June 2007 and is subject to customary closing conditions and purchase price adjustments.
EVEP plans to initially finance the acquisition with bank borrowings and expects to refinance a portion of the borrowings through the issuance of additional equity during the second or third quarter of 2007.
As a result of the acquisition, management anticipates that it will recommend to the Board of Directors a further increase in the quarterly distribution rate, beginning with the distribution for the third quarter of 2007 (payable during the fourth quarter of 2007) subject to the closing of the acquisition.
The acquisition is comprised of wells producing primarily from the Austin Chalk formation in 10 counties in Central and East Texas. The properties, and EVEP's share of reserves and production, include:
- 1,297 active wells (892 operated)
- Estimated proved reserves as of April 1, 2007, net to EVEP, (based on current strip prices) of approximately 39 BCFE
- 82 percent proved developed producing
- 52 percent natural gas, 21 percent crude oil and 27 percent natural gas liquids
- 85 percent operated by value
- 2007 Reserves-to-production ratio of 8.1 years (EVEP's 2007 pro forma R/P will be approximately 15.8 years)
- Estimated productive life of over 40 years
- Current net daily production to EVEP's interest of approximately 13.8 MMCFE
- 75 currently identified proved undeveloped horizontal locations that will be drilled at lower cost through reentering existing vertical wells
- Significant probable and possible potential
- Over 40% increase in cash flow (revenues less direct operating expenses) for the second half of 2007, based on 1) the midpoint of previously released guidance for EVEP's existing assets and the guidance provided below for the assets to be acquired and 2) recent NYMEX prices for the applicable period.
John B. Walker, Chairman and CEO, said, "We believe the Giddings and Brookeland Field assets that we are acquiring from Anadarko are mature yet have significant upside. We expect the acquisition to be accretive immediately to distributable cash flow per unit. This acquisition demonstrates the benefit of the EnerVest organization by providing an opportunity for EVEP to participate in an attractive acquisition that would have been too large for EVEP to acquire on its own."
For the second half of 2007, EVEP expects the following for the properties to be acquired:
Net Daily Production: Natural gas (Mcf) 6,850 - 7,350 Crude oil (Bbls) 405 - 435 Natural gas liquids (Bbls) 495 - 535 Total (Mcfe) 12,250 - 13,170 Price Differentials vs. NYMEX: Natural gas ($/Mcf) ($0.30) - ($0.50) Crude oil ($/Bbl) ($2.00) - ($2.70) Natural gas liquids (% of NYMEX Crude) 59% - 63% Lease operating expenses ($thous) 3,150 - 3,400 Production and other taxes (% of oil, gas and ngl revenues) 5.8% - 6.0% Incremental general & administrative expense ($thous) 250 - 500
In conjunction with the acquisition, and consistent with its strategy of hedging a significant percentage of its production, EVEP intends to enter into arrangements to hedge a substantial portion of the acquired production volumes at or prior closing.
EV Energy Partners, L.P., is a master limited partnership engaged in acquiring, producing and developing oil and gas properties.
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