By the OGJ Online Staff
HOUSTON, June 21 -- Penn Virginia Corp. Radnor, Pa., said Thursday it would buy Synergy Oil & Gas Inc., Houston, for $112 million in cash.
Synergy is a privately owned independent exploration and production company with operations primarily in West Texas and the Texas onshore Gulf Coast. The transaction is expected to close by July 23.
Penn Virginia estimates that by July 1, Synergy will have reserves totaling 59.2 billion bcf equivalent, about 55% of which is gas and 45% is oil. Production is 12 MMcfd and 1,200 b/d, or 19.2 MMcfd equivalent.
Synergy has interests in 25 fields, 20 of which are in the onshore Gulf Coast. Two Texas fields, SW Rugeley in Matagorda County and Tom Lyne in Live Oak County account for 46% of reserves and 40% of first quarter production.
In addition, Synergy has interests in 163 producing wells, 86% of which it operates, and control of 27,300 net developed and 10,000 net undeveloped leasehold acres. It also has 214 square miles of 3D seismic data.
James Dearlove, Penn Virginia president and CEO, said the company has been focusing on the Gulf Coast since it adopted a strategy in 1998 of expanding outside of Appalachia.
Penn Virginia said it plans to drill 15 to 20 wells/year over the next several years, including development drilling and exploratory drilling on Synergy's inventory of prospects.
"Penn Virginia anticipates hedging a significant portion of current production shortly after closing to provide some level of downside price protection for the balance of 2001 and calendar years 2002 and 2003," the company said.