Southwestern Energy to Sells East Tx. Assets
Southwestern Energy has entered into a definitive purchase and sales agreement with EXCO Resources for the sale of certain oil and gas leases, wells and gathering equipment held by the company in East Texas for approximately $355 million, subject to customary purchase price adjustments, effective April 1, 2010. The sale includes only the producing rights to the Haynesville and Middle Bossier Shale intervals in approximately 20,063 net acres. The company's net production from the Haynesville and Middle Bossier Shale intervals in this acreage was approximately 10 MMcf equivalent per day as of April 1, 2010 and proved net reserves were approximately 31 Bcf equivalent as of year-end 2009. The company has retained the drilling and producing rights covering all other depths in the acreage, including the company's current James Lime and Pettet drilling programs. The transaction is expected to close in the second quarter of 2010.
The company will continue to have an active drilling program in East Texas, which includes approximately 10,500 additional net acres under which it believes that the Haynesville and Middle Bossier Shale intervals are prospective. The company is currently drilling its second Haynesville/Bossier well in this additional acreage and expects initial production to occur in the fourth quarter upon the completion of pipeline infrastructure.
As a result of the sale of these properties, Southwestern has revised its capital program in East Texas for calendar year 2010 to approximately $185 million, which includes participating in approximately 35 to 45 gross wells, down from $230 million, which had included 50 to 60 wells.