2009-03-04-2009-03-04-2009-04-01

Acquired 110,000 net acres with more than 1,100 producing Niobrara wells in Yuma Co., CO., gaining 18 MMcfe/d, 21 MMBOE proved.

An undisclosed buyer has closed its acquisition of mature, producing assets in the Denver-Julesburg Basin in northeastern Colorado from Berry Petroleum Co., Denver, (NYSE: BRY) for approximately $154 million, representing essentially all of the company's properties in the region. Berry held approximately 110,000 net acres with more than 1,100 producing Niobrara wells in Yuma County. Production is approximately 18 million cubic feet per day. At year-end 2008, proved reserves were 21 million barrels of oil equivalent. The deal represents 8.5% of Berry's total proved reserves and 5.1% of proved and probable reserves. Additionally, the transaction involved midstream assets and an associated gas hedge for six months valued at $14 million. The effective date is April 1. Berry will use proceeds to pay debt. Scotia Waterous was advisor to Berry. In June, Berry acquired 4,500 net acres in East Texas for $653 million. Pritchard Capital Partners analysts value the deal at $7,777 per daily flowing Mcfe. Scotia Waterous was advisor to Berry. Tudor, Pickering, Holt & Co. Securities analysts describe the deal as a "decent price for a Rockies-area punt that gets Berry out of the debt-laden penalty box." The sale high-grades the company's portfolio away from differential-challenged basins and immediately addresses balance-sheet concerns "with a visible path to get net debt/cap down to about 40% by year-end 2010," they add. Assuming a sale price of $140 million for the upstream assets (with no value given to the midstream), the TPH analysts estimate Berry received $1.10 per Mcfe for proved reserves and $47,000 per flowing barrel of oil equivalent. They also believe Berry is marketing an East Texas midstream package that could bring an additional $25 million to $35 million. Berry operates in California, Colorado, Texas and Utah.