Energen Resources Corp., a subsidiary of Energen Corp., Birmingham, Ala., (NYSE: EGN) plans to acquire Permian Basin properties from a private company for $168 million. The transaction is expected to close by the end of the year. The properties to be acquired include the North Westbrook Unit in Mitchell County, Texas, and two smaller fields nearby, and encompass approximately 15,000 gross acres. The purchase includes proved reserves of approximately 21.8 million barrels of oil equivalent (80% undeveloped, 90% oil) and probable reserves of some 15 million barrels of oil equivalent. Assuming future development costs of approximately $145 million on proved reserves and $80 million on probable reserves, the all-in acquisition cost is $10.62 per barrel ($1.77 per thousand cubic feet equivalent). "This acquisition is an excellent fit for Energen Resources," says James McManus, Energen Resources president and chief operating officer. "While these properties have a smaller component of proved developed reserves than our previous acquisitions, their location adjacent to our successful Southeast Westbrook Unit represents an important expansion in one of our core areas of operation and gives us an excellent opportunity to capitalize on our operating expertise there." The properties are 100% operated and are long-lived with a proved reserves-to-production ratio of more than 30. Production is estimated to be 500,000 barrels of oil equivalent in 2006. Energen has entered hedge contracts to sell oil volumes comparable to approximately 85% of the acquisition's total estimated proved production for 2006 through 2009. Energen plans to use available cash and existing lines of credit to finance the acquisition.
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