By OGJ editors
HOUSTON, June 21 -- Magnum Hunter Resources Inc., Irving, Tex., agreed to buy oil and gas properties in New Mexico for $243 million from Tom Brown Inc., a subsidiary of EnCana Corp., Calgary.
Most of the properties are in Lea and Eddy counties and in the vicinity of Magnum Hunter's Morrow-Atoka-Strawn drilling program. This acquisition will more than double Magnum Hunter's well count in southeastern New Mexico.
Subject to customary closing conditions, closing is anticipated by July 30, retroactive to May 1. Earlier this year, EnCana agreed to buy Tom Brown Inc. for $2.7 billion, including the assumption of debt (OGJ, May 3, 2004, p. 44).
An independent reservoir engineering firm estimated that the properties to be acquired represent 99 bcfe of proved reserves (77% natural gas), including 45 proved undeveloped locations.
Magnum Hunter's geologists and engineers identified numerous additional locations and estimate that another 50-70 Morrow formation locations can be developed. Magnum Hunter's internal reserve estimate calls for 50 bcfe of proved, probable, and possible reserves from these additional wells.
In addition to 458 producing oil and gas wells, Magnum Hunter also plans to acquire 44,000 net acres of undeveloped leasehold mineral interests. The properties to be acquired produce 18 MMcfd of gas and 870 b/d of hydrocarbon liquids. This represents a 72% increase to Magnum Hunter's existing production from southeastern New Mexico.