2010-04-12-2010-04-12-2010-06-29

Acquired 35,000 acres in Eagle Ford shale play in La Salle & Frio Counties, TX.

Goodrich Petroleum Corp., Houston, (NYSE: GDP) plans to acquire an average 70% interest in approximately 50,000 gross (35,000 net) acres within the oil window of the Eagle Ford shale play in La Salle and Frio counties, Texas, from an undisclosed seller for $59 million in cash and drilling carries. The purchase price equates to an average of $1,675 per net acre, with approximately $15 million in cash and the option to drill to earn its full interest through $44 million in carried drilling costs. The deal is expected to close in May.

Wells Fargo Securities LLC analyst Michael Hall says, "We view this as a reasonable cost of entry, particularly given the lower time value of the carried cost option, into an increasingly exciting liquids play, with important tactical and strategic implications for Goodrich." On 160-acre spacing, he says, the deal represents about 220 net locations, or about 15 years on a two-rig program (assuming 7.5 wells per rig per year). "At approximately 330,000 BOE per well gross, this is about 70 million BOE net to Goodrich of potential reserves."

Jefferies & Co. Inc. analyst Subash Chandra says the acquisition economics compare well to Petrohawk Energy Corp.'s recent acquisition in overpressured De Witt County at $3,000 per acre and its joint venture with Swift Energy Co. in McMullen County also at $3,000 per acre, as well as BP Plc's joint venture with Lewis Energy Group, estimated at $4- to 5,000 per acre. "On the other hand, Petrohawk also bought into their normally pressured Red Hawk position in Zavala County for $200 per acre," says Chandra. "Goodrich's acquisition is likely in the normally pressured oil play, where EUR targets are in the 100,000 to 250,000 BOE range."