BreitBurn Energy Acquires Rockies Assets For $283 Million

Closed the acquisition of 238,000 gross acres in WY, CO & UT, primarily in Evanston and Green River basins of SW WY, gaining more than 30 MMcfe/d, 230 Bcfe proved

BreitBurn Energy Partners LP, Los Angeles, (NASDAQ: BBEP) has closed the acquisition of gas and oil producing properties in Wyoming, Colorado and Utah from Cabot Oil & Gas Corp., Houston, (NYSE: COG) for approximately $283 million in cash.

The assets are primarily in the Evanston and Green River basins of southwestern Wyoming. The properties total 238,000 gross acres (111,500 net) in Wyoming, 15,000 gross acre (13,000 net) in Colorado and 2,000 gross acres (500 net) in Utah. The acquisition features approximately 620 producing wells in 16 fields.

Production for 2012 is projected to average more than 30 million cubic feet of gas equivalent per day.

Estimated proved reserves are approximately 230 billion cubic feet equivalent (95% gas), including approximately 136 Bcfe of estimated proved developed producing reserves. Upside includes more than 90 proven, undeveloped drilling locations and more than 600 additional potential drilling locations. The estimated reserve-life index is approximately 21 years on estimated proved reserves and 12 years on estimated proved developed producing reserves.

The deal also includes limited acreage and non-operated interests in Colorado and Utah, representing an exit from these states for Cabot.

Hal Washburn, BreitBurn chief executive, said the acquisition further expands BreitBurn’s presence in the Rockies where the company has operating expertise and where he believes there are numerous additional acquisition opportunities.

“These high-quality assets should provide years of production growth through a significant inventory of low-risk development opportunities and enhance our exposure to natural gas, which we think is attractively valued relative to oil,” he says. “This acquisition is consistent with our past practice of working closely with large oil and gas producers as they consider exiting a region ... We continue to actively pursue other acquisition opportunities that fit our business model.”

Dan Dinges, Cabot chairman, president and chief executive, says, "We have not allocated capital to these assets since early 2009, and we have no near-term plans for new investments due to other opportunities in our portfolio. For this reason, when the opportunity arose to monetize and effectively accelerate the cash flows from these assets, we agreed with the thought to redeploy non-valued capital into our Marcellus activity and our oil initiatives.”

BreitBurn will fund the deal with borrowings under its existing bank credit facility. The deal is expected to close by year-end 2011. The effective date is Sept. 1.

The deal follows a $58-million Wyoming acquisition in Niobrara County in June.

Barclays Capital analyst Gary Stromberg calculates BreitBurn is paying $1.24 per Mcfe of proved reserves, and $9,500 per Mcfe per day of production.