Barrett Resources Corp., Denver, acquired interests in 54,675 acres of coal bed methane properties in the Raton basin in southern Colorado for $52.9 million cash. The purchase from Kansas City Power & Light Co. (KCP&L) affiliate, Apache Canyon Gas LLC, includes proven coal bed methane gas reserves of 75 bcf, with about 80% undeveloped.
About 83% of the total leasehold, or 45,555 acres, is undeveloped. Most of that is under a perpetual mineral ownership with a 100% net revenue interest. A gas gathering and compression system and 57 producing wells also are included, with an effective sales date of Oct. 1, Barrett said Thursday.
The company will begin immediate development of the Vermejo Formation coals at depths of 1,400-2,400 ft. It plans to continue an active development program and to drill several pilot programs targeting the Vermejo and Raton Formation coals in 2001. Both coals are currently producing in the basin.
"These properties provide significant opportunity to grow gas reserves, production, cash flow and operating income and complements our quality portfolio of low risk, long-term development projects in the Rockies," said Peter A. Dea, Barrett chairman and CEO. "We also have the opportunity to leverage our technical and operational expertise into a new core area to maximize the value to our shareholders."
The KCP&L earnings impact from this transaction will be 26�/share and will be booked in the fourth quarter. Its previously announced sale of Raton properties to Denver-based Evergreen Resources Inc. resulted in earnings of 62�/share in the third quarter and 23�/share in the fourth quarter of this fiscal year. In aggregate, KLT Gas transactions will contribute $1.11/share to the KCP&L total year earnings.
"These sales by KLT Gas show the benefit of our ongoing strategy of acquiring natural gas properties, developing the resources and then divesting at a timely point to realize value for our shareholders," said Bernie Beaudoin, president of KCP&L.
Gregory J. Orman, CEO and president of KLT Inc., said the sales to Evergreen and Barrett complete the company's investment cycle in the Raton basin. KLT Gas will now turn its attention to developing 175,000 additional acres of coalbed methane gas properties in the Powder River, Sand Wash, Hanna, Arkoma, and Forest City regions. The company will continue to acquire early-stage coalbed prospects where KLT Gas can add value.