As a kid on my grandparents' land in Central Texas, we would take the softball size hard green, knobby "horse apples" from the bois d'arc tree and throw them like leaden snowballs painfully at each other until somebody quit or got hurt. My dad cursed the tree as a trash tree, and preferred to remove them by burning them where they stood rather than ruining the chain on his chainsaw with the hard wood. And the fruit is called horse apples because only the livestock were tough enough to eat the things. But when Stone Energy announced today they're buying out Bois d'Arc Energy for $1.8 billion, you've got to think there's some pretty sweet tastin' horse apples on that tree. Says Stone CEO David Welch, "We feel very comfortable in the value we are receiving for our consideration." All of Bois d'Arc's assets are in shallow-water Gulf of Mexico in Louisiana and fed waters and---on a map---nestle nicely with Stone's existing GOM properties. Bois d'Arc puts their reserves at 398 Bcfe at YE07, but Stone cut that to 335 Bcfe by internal estimates. Both agree on 127 billion in probable and 116 million MMcfe/d flowing. Check their presentation for details by clicking here. Stone believes it is additionally receiving access to more than 80 prospects with five to six years of exploration opportunities. "The real synergy is combining the exploration skills of Bois d'Arc with our exploitation and development skills," Welch says. "We see it as great fertile ground to try and deliver as many of those reserves as possible." Too, the experienced Bois d'Arc team of Gary Blackie, Bill Holman and Greg Martin have hired on through a participation agreement to continue developing prospects that Stone will bankroll and receive 50% in each prospect. "It allows me to focus 100% of my efforts to doing what I do best," says Bois d'Arc CEO Blackie. Blackie's team will also continue in a consulting role on the assets it knows so well. Stone is funding a chunk of the acquisition with $500 million from its sale of Rocky Mountain properties last summer to Newfield Exploration. Welch says the Bois d'Arc assets will provide a "time bridge" for the company while it develops plays in the deepwater Gulf and in the Marcellus shale, where it holds 27,000 net acres and has drilled two vertical wells. All of the related boards have approved the deal. No doubt. Former Bois d'Arc CEO and current director Wayne Laufer holds 10%. Blackie holds 8%. Do the math. $180 million and $144 million. Nice horseapples, guys.
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