July 22, 2008
Vanguard Natural Resources to Acquire Gas Properties in South Texas
Vanguard Natural Resources has signed a definitive agreement to acquire natural gas properties in south Texas for $53.4 million from an affiliate of the Lewis Energy Group.
The properties to be acquired have total estimated net proved reserves of 20 billion cubic feet equivalent as of June 1, 2008, of which approximately 98% is natural gas and 65% is proved developed. These reserves have a 1,150 British thermal unit content.The Lewis Energy Group will continue to operate all of the wells acquired in this transaction and will continue to operate the undeveloped portion of the properties, which Vanguard and Lewis will jointly develop. This transaction is scheduled to close before the end of July 2008, and is subject to customary closing conditions and certain preferential rights to purchase applicable to the properties.
Upon closing, Vanguard will assume from Lewis natural gas swaps and collars based on Houston Ship Channel pricing for approximately 85% of the estimated gas production from existing producing wells for the period beginning July 2008 through December 2011. A schedule of the hedges to be acquired in this transaction is shown below. Vanguard expects to finance the cash portion of the acquisition with borrowings under its existing credit facility.
Scott Smith, president and CEO of Vanguard, said: "This transaction will accomplish many things for the company. We expect to increase our daily gas production approximately 27% while at the same time forging a strategic relationship with Lewis Energy Group. Lewis operates over 1,050 producing wells and consistently drills 100-125 wells per year in this trend."