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Father-son team takes Encore Acquisition to a higher level Rapidly growing company records $123M takeover of Cortez Oil & Gas Ray Tyson Petroleum News Houston Correspondent
The father-son team of Jon and Jonny Brumley has elevated their small Fort Worth, Texas-based Encore Acquisition Co. with the $123-million takeover of U.S. independent Cortez Oil & Gas, a privately held E&P company said to be a “perfect fit” for the rapidly growing Encore.
“These are quality properties, and we have identified a large portfolio of projects that will enable Encore to increase production and reserves,” Jonny Brumley, Encore’s president and son of Encore Chairman and Chief Executive Officer Jon Brumley, said March 2.
Brumley senior also once served as chairman and chief executive officer of big exploration and production independent Pioneer Natural Resources, while Brumley junior held the position of manager of commodity risk and commercial projects for Pioneer.
Brumley senior also served as chairman and chief executive officer of Mesa Petroleum until Mesa’s merger with Parker & Parsley in 1997 to form Pioneer. He helped found Encore in 1998.
During the past two years alone, Encore increased revenues 37 percent to $220.1 million and cash flow from operations 35 percent to $123.8 million, while boosting production 10 percent to 22,218 barrels of oil equivalent per day. The company reported year-end proved reserves of 141 million barrels of oil equivalent.
Under terms of its transaction with Cortez, scheduled to close in this year’s second quarter, Encore said it would gain total proved reserves of 15 million barrels of oil equivalent, 60 percent of which are proved developed and producing. The properties have an additional 7.8 million barrels of identified drilling and waterflood opportunities, the company said.
Moreover, the Cortez properties are 80 percent operated and currently producing about 8,400 thousand cubic feet per day of natural gas and 1,550 barrels per day of oil, Encore said. Cortez also owns more than 25,000 net developed acres and over 48,000 net undeveloped acres, giving Encore a broad base in which to bring on new production. Properties in close proximity But what makes the Cortez acquisition a natural fit for Encore is the close proximity of most of each other’s properties.
Cortez properties are in the Cedar Creek anticline of Montana, the Permian basin of West Texas and Southeastern New Mexico, the Midcontinent’s Arkoma and Anadarko basins of Oklahoma and the prolific Barnett Shale play near Fort Worth.
In fact, the Cedar Creek anticline properties actually extend Encore’s current operations in the area and are directly adjacent to Encore’s North Pine unit. Proved reserves are estimated to be about 4 million barrels of oil equivalent, with current production of about 900 barrels per day.
The Permian Basin properties are mainly oil and are near Encore’s current operations in West Texas. Proved reserves are about 3.2 million barrels of equivalent and current production is about 930 barrels per day. The Midcontinent includes the Golden Trend of the Anadarko basin and the Spiro (Atoka) zone in the Arkoma basin.
“Encore has identified numerous recompletion and infill development opportunities in these basins,” Encore said, adding that it will operate 100 percent the leases in Denton and Tarrant counties. Proved reserves in the Midcontinent are estimated to be 47 billion cubic feet of gas equivalent, and current production is 6,700 thousand cubic feet per day.
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