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MDU Subsidiary Purchases Natural Gas Properties
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- Created on Tuesday, 06 April 2010 10:19
- Written by Press Room
Fidelity Exploration & Production Company, the wholly owned natural gas and oil production subsidiary of MDU Resources Group (NYSE: MDU), announced that it signed a purchase and sale agreement on March 15, to acquire producing natural gas properties located in the Green River Basin in Sweetwater and Carbon counties in southwest Wyoming.
Based on estimates by Fidelity’s reservoir engineers, the acquired properties include 63 billion cubic feet equivalent (Bcfe) of proven reserves of which 51 Bcfe is proved developed producing. In addition, the acquisition includes an additional estimated unproven reserve potential of 67 Bcfe to 190 Bcfe based primarily on infill drilling opportunities. Net production as of the effective date of the transaction was approximately 14.5 million cubic feet equivalent per day, 92 percent of which was natural gas. Approximately 63 percent of the daily production will be from wells operated by Fidelity.
The purchase price for the properties is $113 million, or $1.80 per thousand cubic feet equivalent of proven reserves, subject to accounting and purchase price adjustments customary with acquisitions of this type. The effective date of the acquisition is Oct. 1, 2009, with the expected closing date to occur on or before April 29, 2010. The acquisition is expected to be accretive to 2010 earnings per share and financed through a combination of internal funds and other borrowings.
“This acquisition further broadens our position in the Rocky Mountain region and supports our production and reserve growth objectives,” said Terry D. Hildestad, president and chief executive officer of MDU Resources. “The producing properties provide immediate production and cash flows and the unproven reserves provide low risk development opportunities.”
