Berry agrees to buy West Texas properties
Berry Petroleum Co. entered into an agreement with an unidentified private seller to acquire interests in producing properties principally in the Wolfberry trend in West Texas for $126 million cash.
By OGJ editors
HOUSTON, Jan. 12 -- Berry Petroleum Co. entered into an agreement with an unidentified private seller to acquire interests in producing properties principally in the Wolfberry trend in West Texas for $126 million cash.
Berry's proved reserve estimates associated with the properties are 11.2 million boe, 92% of which are in the Wolfberry, 85% are oil reserves, and 23% are proved developed reserves. In 2010, the acquisition is expected to add 1,300 boe/d to Berry's production on a 12-month annual average. Berry has identified over 130 drilling locations in the Wolfberry trend targeting the Spraberry, Dean, Wolfcamp, and Strawn formations.
Robert Heinemann, president and chief executive officer, said, “This acquisition provides Berry with the opportunity to diversify its oil resources and add a high margin, scalable oil resource to our portfolio. We believe the Wolfberry is an excellent fit with Berry's engineering and execution competencies and complements our existing stable base of low geologic risk oil assets. We will be the operator of 70% of the acquired properties and plan to transition a new West Texas focused asset team over the coming months.”
Berry is increasing its 2010 capital budget by an additional $30 million to range $250-290 million. The company plans to drill 27 wells on the Permian property, funded from internally generated cash flow. One rig is currently drilling and Berry expects the acquired properties to provide self-funded production growth over the coming years.
Berry expects its 2010 production to be 32,250-33,000 boe/d, an increase of 8-10% over 2009. In addition, Berry's production from oil assets is expected to grow 20% by yearend driven by Diatomite and Wolfberry development.
The effective date of the transaction was Jan. 1. Closing is expected in March, subject to customary conditions.