Evergreen to sell Kansas CBM assets

Ray Tyson

Coalbed methane producer Evergreen Resources, which is being acquired by Pioneer Natural Resources, has agreed to sell its Forest City basin coalbed methane assets in Kansas to Heartland Oil and Gas Corp. for $22 million.

Evergreen’s Kansas assets include about 766,000 acres of leases, well bores, surface equipment, gathering and surface facilities, vehicles, pipelines, as well as geological, engineering, land and accounting data and records, Evergreen said Sept. 21.

Heartland said it entered into a separate agreement with C.K. Cooper & Co. and Sterne, Agee & Leach to arrange necessary financing to complete the transaction and provide Heartland with working capital.

As a condition to closing, Heartland has required that Evergreen’s executive officers agree to serve as advisors for two years to provide transition assistance to Heartland in the operation and development of the Kansas assets.

In addition, Heartland said it intends to retain all field personnel. Subject to a definitive purchase and sale agreement and Heartland obtaining necessary financing, closing of the acquisition was expected to occur on Sept. 24, the companies said.

Heartland to launch aggressive development program

Based on Heartland’s offer price of $22 million and after deducting estimated transaction costs, net proceeds in excess of $15 million from the sale of the Kansas properties would provide Evergreen shareholders with estimated additional cash of 12 cents to 14 cents per share. Heartland is an emerging coalbed methane company focusing on its substantial acreage position in the Forest City basin. Heartland has acquired leasehold interests in about 252,000 acres in the basin and the company said it intends to launch an aggressive development program focusing on three distinct plays once its deal with Evergreen closes.