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Whiting Petroleum buys Celero properties Firm to spend $802M in cash and stock to buy Celero properties in Texas, Oklahoma; deal nearly doubles Whiting’s reserves Ray Tyson Petroleum News Houston Correspondent
Denver-based exploration and production independent Whiting Petroleum is accumulating U.S. oil and gas properties faster than a hungry squirrel collects nuts for the winter.
In 2004 alone, Whiting completed six property transactions and a merger with Equity Oil, ending that year with proved reserves of 865.4 billion cubic feet of gas equivalent, a hefty 97 percent increase over its year-end 2003 reserves of 438.8 bcfe.
The company then proceeded to gobble up another $95 million worth of U.S. properties in 2005, not including a rather large $802-million cash and stock deal announced July 26. That pushed Whiting’s total proved reserves to about 1.6 trillion cubic feet of gas equivalent, an 85 percent increase over 2004 year-end reserves.
“The purchase fits our plan to grow our asset base through acquisition and subsequent development of producing oil and gas properties,” Whiting chief executive James Volker declared in announcing the deal that actually included two separate transactions with the same company. Celero properties in Oklahoma, Texas Whiting said this time it was buying of oil and gas properties in the Oklahoma Panhandle and the Permian basin of West Texas from Celero Energy, LP, owned by Quantum Energy Partners of Midland, Texas. The transactions specifically include Celero’s interests in the Postle field in Oklahoma and the North Ward Estes field in West Texas. Combined proved reserves for the two fields were estimated at 734 bcfe, 94 per cent of which is oil and 43 percent of which is developed, according to Whiting.
Under terms of its latest deal, Whiting has pledged to pay Celero $343 million in cash at an August closing and $442 million in cash at an October closing, as well as issue 441,500 Whiting shares to Celero at the October closing. Based on recent trading, the stock has a value of around $17 million. Whiting will operate 95% Upon the closings, Whiting said it will operate about 95 percent of the Celero properties, which the company said produced at an average net rate of 7,510 barrels of oil per day and 2.8 million cubic feet of natural gas per day.
Substantially all of the properties to be acquired from Celero have the potential for enhanced recovery and CO2 injection, as well as reserve growth associated with development and exploratory drilling, Whiting said.
Whiting said that through 2006 it intends to invest about $197 million to further develop the Postle and North Ward Estes fields.
Meanwhile, Whiting reported a 2005 second-quarter profit of $24.2 million or 82 cents per share on revenues of $111.1 million, a substantial increase over 2004 second-quarter net income of $13.5 million or 72 cents per share on revenues of $54.7 million.
Second-quarter 2005 production also climbed to 180 million cubic feet of natural gas equivalent per day, representing a 75 percent increase over the 103 million cubic feet of equivalent average in 2004’s second quarter. The increase was primarily due to the producing property acquisitions that Whiting closed in the second half of 2004, Whiting said.
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