2010-01-11-2010-01-11-2010-04-28

To buy interest in W TX Permian Basin Wolfberry trend, gaining 11.2 MMBOE proved.

Denver's Berry Petroleum Co. (NYSE: BRY) plans to acquire interests in producing properties principally in the Wolfberry trend in West Texas from an undisclosed private seller for approximately $126 million in cash, marking the company's first entry into the Permian Basin. The assets involve proved reserve of 11.2 million barrels of oil equivalent (85% oil, 23% proved developed), of which 92% are in the Wolfberry trend. Berry estimates the acquisition will add approximately 1,300 barrels of oil equivalent per day to production on a 12-month annual average. Upside includes more 130 drilling locations in the Wolfberry trend targeting the Spraberry, Dean, Wolfcamp and Strawn formations. Berry will operate 70% of the acquired properties. Robert Heinemann, Berry president and chief executive, says, "This acquisition provides Berry with the opportunity to diversify its oil resources and add a high margin, scalable oil resource to our portfolio. We believe the Wolfberry is an excellent fit with Berry's engineering and execution competencies and complements our existing stable base of low geologic risk oil assets." He says the company plans to transition a new West Texas-focused asset team over the coming months. Berry is increasing its 2010 capital budget by an additional $30 million to between $250 million and $290 million, which it expects to be funded from cash flow. The company plans to drill approximately 27 wells on the Permian property. One rig is currently drilling. Berry says it expects its 2010 production to be between 32,250 and 33,000 barrels equivalent per day, an increase of 8% to 10% over 2009. In addition, Berry's production from oil assets is expected to grow 20% by year-end 2010 driven by Diatomite and Wolfberry development. The effective date is Jan. 1. Closing is expected in March.