2010-04-29-2010-04-29-2010-06-02

Bought 335,000 acres in AL Black Warrior Basin, gaining 190 Bcfe proved, 23 MMcf/d.

Walter Natural Gas LLC, the E&P subsidiary of coal producer Walter Energy Inc., Tampa, Fla., (NYSE: WLT), has acquired the Alabama Black Warrior Basin gas interests of Houston-based HighMount Exploration and Production LLC for approximately $210 million in cash.

The acquired assets comprise HighMount's Alabama coalbed-methane operations, including approximately 1,300 conventional gas wells, pipeline infrastructure and related equipment near Walter's existing underground mining and CBM business in Tuscaloosa County.

HighMount held some 506,000 gross acres (335,000 net; 254,000 net undeveloped) in the Black Warrior Basin as of year-end 2009. Current proved reserves are approximately 190 billion cubic feet, and annual production is 8.5 Bcf. The purchase price equated to $1.10 per thousand cubic feet of proved reserves. Approximately 47 HighMount Alabama employees have accepted offers to remain with the company.

Walter interim chief executive Joe Leonard says, "While this acquisition more than doubles our annual coalbed-methane production and is expected to be a stable generator of earnings and cash flows into the future, it is more important to us because it helps ensure that future coal production areas will be properly degasified, thereby improving the safety and operational efficiency of our existing and future underground coking coal production."

HighMount is a subsidiary of Loews Corp. (NYSE: L). Walter has revenues of approximately $1 billion. Raymond James & Associates and RBC Richardson Barr were advisors to Walter and HighMount, respectively.