2008-09-02-2008-08-11-2008-07-11

Bought Appalachian assets in Ritchie Co., WV, gaining 32.9 Bcfe proved developed, 3.2 MMcfe/d net.

The MLP Quest Energy Partners LP, Oklahoma City, (Nasdaq: QELP) has acquired Appalachian assets from its general partner Quest Resource Corp., Oklahoma City, (Nasdaq: QRPC) for approximately $72 million in cash. Quest Resource acquired the wells as part of its purchase of privately held, Houston-based PetroEdge Resources (WV) LLC for approximately $140 million and sold the proved developed reserves to Quest Energy. Proved developed reserves are estimated to be 32.9 billion cubic feet equivalent (48% proved developed producing; 96% gas). Current net production is approximately 3.2 million cubic feet equivalent per day (100% operated, 92% gas. Approximately 74% of current production and 76% of the wellbores are in Ritchie County, West Virginia. More than 100 behind-pipe completion opportunities exist in the Marcellus shale and Devonian Silt formations. Jerry Cash, chairman and chief executive of the general partner of Quest Energy, says, "Quest Energy is acquiring long-lived natural gas producing properties that are immediately accretive to distributable cash flow per unit, add geographic and geologic diversity, receive premium natural gas pricing, and offer numerous low-risk development opportunities." Quest Energy funded the purchase with borrowings under its existing revolving credit facility and a $45-million, six-month bridge facility. Quest Energy lenders increased the borrowing base of its revolving credit facility to $190 million from $160 million. In connection with the acquisition, the partnership entered into costless collars from 2009 through 2011 covering 1.8 million cubic feet per day with an average floor of $10.25 per million Btu and an average ceiling price of $13.67 per million Btu. Stifel, Nicolaus & Co. Inc. was financial advisor to Quest Energy and delivered a fairness opinion.