Houston to acquire Gulf properties

The Houston Exploration Co. has agreed to buy producing assets on the Gulf of Mexico’s outer continental shelf for $145 million, the company said Sept. 22. The sellers were not disclosed.

The largest package totals $113.5 million and includes estimated proven reserves of 63 billion cubic feet of natural gas equivalent, 81 percent of which is natural gas, Houston Exploration said.

Current daily production is from 12 fields with rates of about 17 million cubic feet of natural gas equivalent. The proven reserve life index is expected to be more than 10 years, the company said.

The assets to be acquired include about 25,300 gross acres. Houston Exploration would operate 85 percent of the proven reserves with an average working interest of 62 percent. The transaction expected to close on or before Oct. 29, the company said.

In addition, the Houston-based independent said it entered into an agreement to purchase $31.5 million worth of interests in two offshore fields which have estimated proven reserves of 16 bcf of gas equivalent and daily production of 5 million cubic feet of equivalent. The assets are 85 percent natural gas.

Houston Exploration said it would operate 100 percent of the proven reserves and would have an average working interest of 85 percent. The transaction is expected to close on Sept. 30.

Houston Exploration said it intends to finance both transactions with its bank revolver and cash on hand at the time of the closings

“These properties are a great fit with our existing Gulf of Mexico operations,” said William Hargett, Houston Exploration’s chief executive officer. “They are within our geophysical surveys, produce primarily gas, represent high working interests, offer significant drilling upside and we will operate most of them.”

Houston Exploration continued to produce at record rates during the 2004 second quarter, with production averaging 351 million cubic feet of natural gas equivalent per day, an increase of 20 percent over the second quarter of 2003.