Edge to pay $50 million for Contango’s South Texas assets

Ray Tyson

Exploration and production independent Edge Petroleum has agreed to acquire virtually all of Contango’s oil and gas properties in South Texas for about $50 million, Edge said Oct. 7.

Edge estimated that the properties to be acquired contain about 18.3 billion cubic of gas equivalent proved reserves, consisting of 16 bcf of proved producing reserves and 2.3 bcf of proved undeveloped reserves.

In addition, Edge said its technical team has identified a substantial number of additional drilling locations on undeveloped acreage. Edge said about $5 million of the $50 million purchase price would be allocated to the undeveloped property.

The properties, located primarily in Jim Hogg County, are in an area of South Texas that has been one of Edge’s most active areas in recent years. The transaction is expected to close before year-end, Edge said.

The properties to be acquired consist of 38 non-operated producing wells with an average 68 percent working interest and 52 percent net revenue interest. Current daily net production from the properties is about 12 million cubic feet of gas equivalent day, 90 percent of which is natural gas.