Quest Adding 78,000 Acres in Marcellus Shale
By Jack Money, The Oklahoman
Jul. 15–Quest Resource Corp. owns about 78,000 new acres in the Marcellus Shale natural gas field in the Appalachian Basin in West Virginia and Pennsylvania.
The company picked up the land from West Virginia-based PetroEdge Resources for about $142 million in a deal that closed on Monday, officials announced.
Quest Resource is making the acquisition using its master limited partnership.
It will own half of PetroEdge — primarily, it’s unproved reserves — and is offering stock to raise cash for various purposes, including its $70 million share of the $140 million cost for buying the company.
Quest Energy Partners, part of Quest’s master limited partnership, is buying the other half of the PetroEdge for the same amount of money, including its on-the-ground assets and proved reserves.
Driving reserve and production growth Jerry Cash, chairman, president and chief executive of Quest Resource, said Monday the company will drive reserve and production growth as it develops its holdings within the Marcellus Shale.
The PetroEdge properties have an estimated proved reserve of 99.6 billion cubic feet of natural gas equivalent, and current net production of about 3.2 million cubic feet per day.
Quest Energy, meanwhile, will benefit from the proved reserves because it will be able to issue growing distributions to its owners, including Quest Resource, which in turn will use that money to help pay for drilling at least six wells within the field later in the year.
Another part of the partnership, Quest Midstream, has first-rights to gather and process the PetroEdge production.
Cash said that gives Quest Midstream an opportunity to build a significant presence in the field.
“We believe the future for Quest is bright as we build a new core area of operations,” Cash said. “We look forward to developing our sizeable acreage position in the basin and further illustrating the benefits of our unique structure.”
Deal ‘positive’ Sheraz Mian, an analyst for Zacks Investment Research, said he doesn’t follow either Quest Resource or PetroEdge.
“But the Marcellus Shale has steadily emerged in the recent past as a very prospective play for domestic natural gas. So in that respect, by getting exposure to a potentially faster growing region, the transaction can be viewed as positive for the acquirer,” Mian said.
To see more of The Oklahoman, or to subscribe to the newspaper, go to http://www.newsok.com.
Copyright (c) 2008, The Oklahoman
Distributed by McClatchy-Tribune Information Services.
For reprints, email email@example.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.