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Comstock Resources, Inc. (CRK) today provided an update on the Haynesville shale located in North Louisiana:
As was previously reported with the Company's second quarter operating results, Comstock has been experiencing significant delays in completing its Haynesville or Bossier shale wells due to the limited availability of high pressure pumping services. On September 30, 2010 the Company has 26 Haynesville or Bossier shale wells drilled and waiting on completion. Going forward, Comstock has been successful in obtaining pressure pumping and other related services which will allow it to frac 14 wells before the end of the year. With six operated rigs drilling in the Haynesville and Bossier shale, Comstock expects to drill another ten wells in the fourth quarter giving the Company an estimated 22 wells to carry over into 2011 for completion. In response to the weak natural gas prices, Comstock plans to release one of the six rigs in November and is considering moving an additional rig to South Texas to be utilized in its Eagle Ford shale drilling program in 2011.
Comstock also announced today that the Company has entered into an agreement with a major service provider to provide the Company with a dedicated frac crew for its North Louisiana operations in early 2011. The dedicated crew will allow the Company to complete its backlog of Haynesville and Bossier shale wells during 2011 as well as keep current with the Company's 2011 anticipated drilling activity. In addition, Comstock is in the process of finalizing agreements for completion services for its 2010 and anticipated 2011 Eagle Ford shale drilling program in South Texas.
Berry Petroleum Company (BRY) - Permian Basin shale Update
Berry Petroleum Company (BRY) announced that it has entered into agreements with a group of sellers to acquire their interests in properties on approximately 9,300 net acres in the Wolfberry trend (Permian Basin) in West Texas for a combined purchase price of $180 million in cash. Berry's proved plus probable reserve estimates associated with the forty-acre development of the properties are approximately 35 million barrels of oil equivalent (MMBOE) with crude oil comprising 76% of these volumes. Upon completion of the acquisitions, the properties are expected to add approximately 2,200 barrels of oil equivalent per day (BOED) to Berry's production during 2011.
Since entering the Permian basin in March of 2010, Berry has accumulated approximately 19,350 net acres in the Wolfberry trend. The $313 million of acquisitions in 2010 is expected to provide a five-year drilling inventory in the Wolfberry of 400 locations on forty-acre spacing with an additional 400 potential locations on twenty-acre spacing.
Robert Heinemann, president and chief executive officer, stated, "We are pleased to bring additional scalable, high margin oil assets into the portfolio which complements our base oil assets in California and Utah. We believe these acquisitions enhance our overall Permian operations with a contiguous 6,800 net acre block and strong per well recoveries of 180 MBOE. The first three years of expected production on these assets has a hedging floor of approximately $87 WTI which should allow these assets to generate operating margins of $62 per barrel. The Company's existing Wolfberry assets, acquired earlier in 2010, are performing in line with expectations and production is 1,700 BOED today. With the acquisitions announced today, we now expect production from our Permian assets will grow to 9,000 BOED during the next four years."
David Wolf, executive vice president and chief financial officer, stated "We expect to fund this acquisition under our credit facility and on a pro forma basis we will have liquidity of over $500 million. With this acquisition, our leverage should be in the range of 2.25 to 2.5 times EBITDA in 2011."
The effective date of the transaction is October 1, 2010 with closing expected in December 2010 and is subject to customary closing conditions. Production from the properties to be acquired is expected to be approximately 1,200 BOED at closing. Contribution to the Company's fourth quarter 2010 production will be minimal given the expected closing date.
Since entering the Permian basin in March of 2010, Berry has accumulated approximately 19,350 net acres in the Wolfberry trend. The $313 million of acquisitions in 2010 is expected to provide a five-year drilling inventory in the Wolfberry of 400 locations on forty-acre spacing with an additional 400 potential locations on twenty-acre spacing.
Robert Heinemann, president and chief executive officer, stated, "We are pleased to bring additional scalable, high margin oil assets into the portfolio which complements our base oil assets in California and Utah. We believe these acquisitions enhance our overall Permian operations with a contiguous 6,800 net acre block and strong per well recoveries of 180 MBOE. The first three years of expected production on these assets has a hedging floor of approximately $87 WTI which should allow these assets to generate operating margins of $62 per barrel. The Company's existing Wolfberry assets, acquired earlier in 2010, are performing in line with expectations and production is 1,700 BOED today. With the acquisitions announced today, we now expect production from our Permian assets will grow to 9,000 BOED during the next four years."
David Wolf, executive vice president and chief financial officer, stated "We expect to fund this acquisition under our credit facility and on a pro forma basis we will have liquidity of over $500 million. With this acquisition, our leverage should be in the range of 2.25 to 2.5 times EBITDA in 2011."
The effective date of the transaction is October 1, 2010 with closing expected in December 2010 and is subject to customary closing conditions. Production from the properties to be acquired is expected to be approximately 1,200 BOED at closing. Contribution to the Company's fourth quarter 2010 production will be minimal given the expected closing date.
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