Carbon Natural Gas acquires natgas producing properties, midstream assets (1)

DENVER — On Sept. 29, Carbon Natural Gas Company, through its affiliate Carbon Appalachian Company, LLC, completed the acquisition of natural gas producing properties, natural gas gathering pipelines and related facilities located predominantly in the state of West Virginia for approximately $41.3 MM subject to normal and customary pre- and post-closing adjustments.

Current daily net production from the acquired assets is approximately 37,400 net daily mcfe of gas. The production is 99% gas. As of June 30, the Company estimates that the properties have 275 bcfe of Proved Developed Producing Reserves as determined by the Company’s qualified reserves evaluator using SEC pricing. The acquisition includes approximately 3,100 mi of natural gas pipelines and related compression facilities and approximately 780,000 net acres of leases, of which approximately 84% are held by production.

The acquired assets will be integrated into Carbon’s existing Southern Appalachian Basin operations and midstream infrastructure. Carbon and its affiliates now have approximately 65,000 mcfe of net daily production from 7,900 wells, estimated proved developed producing reserves of 436 bcfe, approximately 4,700 mi of natural gas pipelines and 1.7 MM net acres of land, of which approximately 80% are held by production.

Effective with the closing of the transaction, Carbon increased its current ownership in Carbon Appalachian to 19.37%. Carbon has the ability to earn additional ownership interests of Carbon Appalachian after a return threshold is met. Carbon is the Manager of Carbon Appalachian, and is reimbursed by Carbon Appalachian for general and administrative expenses associated with the management of the assets.

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