By the OGJ Online Staff
HOUSTON, Aug. 13 -- Magnum Hunter Resources Inc. of Irving, Tex., said Monday it signed a definitive agreement to buy Delaware Basin oil and natural gas reserves, along with other related assets, in Eddy and Lea Counties, N.M., from Mallon Resources Corp. for $32.2 million.
The acquisition includes Mallon's interest in 23 fields, consisting of 141 producing wells and 13,742 net mineral acres, in southeastern New Mexico. Those properties had proved reserves estimated at 41.8 bcf of equivalent gas at the start of this year, weighted 73% gas to 27% oil.
The final price is subject to production adjustments for a sales date effective July 1.
Magnum Hunter's wholly owned subsidiary, Gruy Petroleum Management Co., will become operator of 59 of the 141 producing wells upon closing, which is scheduled by Sept. 15.
The company is in the process of completing its due diligence reviews, including title and environmental inspections on all the properties.
The pending acquisition provides "relatively low development risk and attractive economics," said Gary C. Evans, president and CEO of Magnum Hunter. It will "complement our very active and successful exploration and development drilling programs that is ongoing in the Morrow and Atoka formations of southeastern New Mexico," he said.
Magnum Hunter currently has several rigs working in that area and is targeting those formations with working interests of 50% and 100% in the two wells currently being drilled.
The company has drilled 14 gross wells in the area, at an approximate cost of $14 million, and discovered 33.5 Bcfe of gas at average finding and development cost of 42¢/Mcfe, said Evans.