Houston-based Petrohawk Energy Corp. plans to buy privately held Wynn-Crosby Energy Inc. and its estimated 200 billion cubic feet equivalent of proved reserves (74% gas; 60% operated; 75% proved developed) for $425 million in cash. The deal was privately negotiated and had been under way since June. Mitchell Energy Advisors LLC, Dallas, advised Petrohawk. The reserves are in South Texas, East Texas, the Permian Basin, the Arkoma Basin and the Midcontinent. Production is approximately 46 million cubic feet equivalent per day. The proved reserve life is 12 years. The assets include more than 100 billion equivalent of probable and possible reserves, some 75,000 net undeveloped acres in the Arkoma Basin in Arkansas, and additional exploration opportunities in South Louisiana. Some $30 million of the purchase price is attributed to probable and possible reserves, undeveloped acreage and other assets. With this deal, Petrohawk's proved reserves will total some 233 billion equivalent, 74% proved developed and 75% gas. Production will be some 57 million equivalent per day. The deal may close Nov. 30. Financing will be with cash, bank debt and equity. Production will be hedged for two to three years. "This is a transforming event for Petrohawk," says Floyd Wilson, president and chief executive officer. "We believe these high-quality, long-lived assets include significant upside, and we will attempt to boost recovery rates within an accelerated development program. We will continue to pursue our combined growth strategies-acquisitions complemented by an aggressive drilling program." Petrohawk was formed last year by former 3Tec Energy executives. 3Tec was sold to Plains E&P. Petrohawk became public this summer when buying a controlling interest in publicly held Beta Oil & Gas. Major properties in the Wynn-Crosby asset base include interests in La Reforma, a Vicksburg field in South Texas; the Dry Hollow and Provident City fields in the Wilcox trend of Lavaca County, Texas; and the Los Indios, Nabors, Ann Mag and McAllen Ranch fields, also in South Texas. In the East Texas Basin, significant properties include interests in the South Carthage, North Beckville and Blocker fields. Other key properties include interests in the Waddell Ranch, Teague and ROC fields in the Permian Basin, the Kinta/Cedars/Pine Hollow area in the Arkoma Basin and the Lipscomb and Eakly-Weatherford fields in the Anadarko Basin. Post-closing, Petrohawk may sell some of the properties acquired, probably the royalty-interest properties. These assets produce approximately 5.5 million cubic feet equivalent per day (55% gas), are in multiple basins and have a long history of continuous development.

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