Vanguard Natural Resources LLC,
Houston, (NYSE Arca: VNR) has acquired
producing properties in South Texas from
an affiliate of San Antonio-based Lewis
Energy Group for approximately $53.4
million in cash and stock.
Vanguard paid $32 million in cash and
1.35 million units worth $21 million based
on the 20-day average closing price.
Estimated proved reserves are 20 billion
cubic feet equivalent (65% proved
developed; 98% gas) in Dos Hermanos
Field in Webb County targeting the Olmos
trend. Production is approximately 3 million
cubic feet equivalent per day. The
reserve-to-production ratio is approximately
18 years. A five-year inventory of
proved undeveloped locations exist based
on a drilling plan of six to eight wells per
year.
Lewis has more than 25 years of experience
in exploration and development of
the Olmos gas-producing trend and operates
more than 1,000 wells which currently
produce approximately 67 million cubic
feet per day net to Lewis’ interest.
Scott W. Smith, Vanguard president
and chief executive, says, “With this transaction,
Lewis has become one of our
largest unit-holders and we look forward to
benefitting from their operational expertise
with these properties and working with
them as we jointly develop our multi-year
inventory of proved undeveloped locations.”
Vanguard will assume hedges covering
approximately 85% of the estimated
proved developed production through
2011. The acquisition was funded from
borrowings from an existing credit facility,
cash on hand, and the units. The units are
locked-up for 180 days.
Vanguard focuses on the southern portion
of the Appalachian Basin, the Permian
Basin and South Texas. Lewis focuses on
South Texas.