2010-01-07-2009-12-18-2010-02-17
Bought 13 operated fields in WY Big Horn, Wind River basins, gaining 8.8 MMBOE proved, 1,478 BOE/d.
The MLP Legacy Reserves LP, Midland, Texas, (Nasdaq: LGCY) has closed its acquisition of interests in 13 operated oil fields in the Big Horn and Wind River basins of Wyoming from St. Mary Land & Exploration Co., Denver, (NYSE: SM) for $130 million in cash.
Proved reserves are estimated to be 8.8 million barrels of oil equivalent (90% proved developed producing). Production is 1,478 barrels of oil equivalent per day (93% oil). Legacy expects future potential for tertiary recovery in some of the fields.
The properties represent a portion of St. Mary's previously announced Rocky Mountain oil property divestiture.
Legacy has existing ownership in the Big Horn Basin pursuant to an operating contract with Iron Creek Energy Group based in Cody, Wyo. Iron Creek will be providing support to Legacy in the operation and administration of the Wyoming properties similar to Iron Creek's current support to Legacy in the Homestead Field in Wyoming and the East Binger Unit in Oklahoma.
Cary Brown, Legacy chairman and CEO, says, "These long-lived Wyoming oil reserves are an excellent fit for our MLP. The PDP reserve-to-producing ratio is 15 years, and the production rate is stable and predictable. Furthermore, adding Wyoming as one of Legacy's core operating areas gives Legacy another geographic growth area and we expect this acquisition to be a springboard for additional acquisitions."
Brown adds that the relationship with Iron Creek, led by Tom Fitzsimmons, is a key component of the company's strategy of growth through acquisitions and development of reserves. Iron Creek will bring engineering, operations, administrative and business development skills to Legacy. "We look forward to working with Tom and his team on integrating the newly acquired properties," he says.
Legacy funded the acquisition with its existing credit facility, which currently has a $340-million borrowing base. Legacy entered into commodity swaps associated with the Wyoming acquisition over the period of 2010 to 2014. Legacy holds properties primarily in the Permian Basin and Midcontinent regions. Subsidiary Legacy Reserves Operating LP will take ownership of the properties.
The effective date is Nov. 1, 2009. St. Mary used proceeds to pay down debt under its revolving credit facility.
Simmons & Co. International was advisor to St. Mary.