The race to acquire Rockies reserves has intensified with the region's development success and because property offerings have not kept pace with buyer demand, says Karla S. Mercer, Denver-based vice president, business development, OGJE-Madison Energy Advisors. "This strong demand continues to assure Rockies sellers of attractive market values for quality assets, with the market placing full values on high-quality nonproducing reserves." This has encouraged Rockies sellers to enter the market with portfolios more heavily weighted to nonproducing and acreage values, in addition to producing reserve packages, she adds. "Sellers are either pruning the asset base of noncore properties or are capital- or resource-constrained and taking advantage of attractive liquidation values." While anticipated to notably improve with a number of new Rockies pipeline expansions, future basis differentials will remain volatile and continue to influence Rockies transaction values. Buyers across the U.S. have good odds of finding bank financing, according to Bill Marko, chief operating officer of Houston-based OGJE-Madison. He says the future commodity-price consensus between active buyers/sellers and energy bankers is improving, based on the firm's quarterly pricing poll. (See "Trends & Analysis" in this issue for results of another poll.) Both ends of the table are nearer than at most times on price expectations. "The banks have also increased their 2003 pricing expectation a great deal from Jan. 1, 2003, to April 1-in fact a big move for them," he adds. -A&D Watch
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