Carbon Natural Gas Co. picked up Appalachian natural gas producing properties and related facilities for about $21.5 million, the Denver-based company said Aug. 16.
The assets, located primarily in West Virginia, currently produce roughly 7.5 million cubic feet per day (MMcf/d), net (100% gas). Proved developed producing reserves are estimated at 52 Bcf, as of July 1.
The acquisition also included about 311 miles of natural gas pipelines, gathering lines and related compression facilities.
Carbon said its affiliate, Carbon Appalachian Co. LLC, completed the acquisition on Aug. 15. The seller was undisclosed.
Additionally, Carbon Appalachian will fund as part of the acquisition an inventory of field development and enhancement projects and general working capital, according to the company release.
Effective with the closing of the transaction, Carbon also said Aug. 16 it increased its current ownership in Carbon Appalachian to 16% from 3%.
Carbon Appalachian was formed in April by Carbon, as manager, and two institutional investors with an initial equity commitment of $100 million to acquire producing assets in Southern Appalachia. Carbon has the ability to earn additional ownership interests of Carbon Appalachian after a return threshold is met, the release said.
Carbon operates 5,000 wells in the southern Appalachian Basin where the company is currently focused on a counter strategy to “go where they ain’t,” CEO Patrick R. McDonald said during an A&D panel at Hart Energy's DUG East conference in Pittsburg in late June.
“We came to the conclusion that [the Marcellus Shale] was going to become a big boy play and we didn’t have the capital to properly compete,” he said.
VIDEO (requires subscription) - Roundtable: A&D Resurgence In Appalachia (2017)
McDonald also added that the consolidation of the large independents in Appalachia—such as EQT Corp. (NYSE: EQT) and Rice Energy Inc. (NYSE: RICE)—gives his team the opportunity to slip in and acquire legacy properties.
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