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Evergreen expands into Canada Mark Sexton says he will aggressively expand Carbon Energy’s reserve base Kay Cashman Petroleum News Publisher & Managing Editor
Coalbed methane producer Evergreen Resources Inc. said March 31 it has agreed to buy Carbon Energy Corp. for $84.4 million plus debt to facilitate its expansion into Canada and add to its unconventional natural gas properties in the United States.
Evergreen is a major coalbed methane producer in Colorado’s Raton basin and is in the process of proving up reserves at the Pioneer unit north of Anchorage in what is expected to be Alaska’s first commercial coalbed methane operation.
Carbon's U.S. oil and gas operations are in the Piceance basin in Colorado and the Uintah basin in Utah; in Canada, it has operations in central Alberta and southeast Saskatchewan. The company’s gross acreage position is approximately 150,000 acres in the United States and 77,000 acres in Canada.
Carbon’s properties are estimated to contain at least 88 billion cubic feet equivalent of proved reserves, substantially all of which are natural gas, Evergreen said in a statement. Current daily net gas production is 13 million cubic feet.
Both companies are based in Denver.
Aggressive drilling planned this year “We believe that substantial upside exists in Carbon's properties in both the Rocky Mountains and Canada,” Evergreen President and CEO Mark S. Sexton said March 31.
“We plan to start drilling aggressively in these areas in 2003. The properties in Colorado and Utah provide Evergreen with access to another large acreage position in close proximity to our Denver headquarters. Utilizing our combined technical expertise in unconventional gas plays, we believe large exploratory reserve potential exists in multiple formations that have not been completely tested.”
Sexton said that Evergreen has been interested “for some time” in acquiring a Canadian company “with a management and technical team that has a demonstrated ability to create reserve value in Canada.”
Evergreen plans to “aggressively” expand Carbon's reserve base, as “their Canadian acreage position contains substantial unexploited potential in a number of formations, including coal seams, tight sands, shales and conventional gas,” Sexton said. Value of stock to be issued is $84.4 million Under the terms of the agreement, Carbon shareholders will receive 0.275 shares of Evergreen for each share they own. Evergreen will issue 1.86 million new shares of stock to Carbon stockholders. The value of the stock to be issued is $84.4 million, based on Evergreen's closing stock price of $45.40 on March 28. Including debt, the deal's total value is $90.8 million.
The transaction is subject to the approval of Carbon's shareholders. The boards of directors of both companies have unanimously approved the merger, Evergreen said.
The deal is expected to close in the second quarter.
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