Comstock Finishes $120 Million Acquisition Program With Eagle Ford Buy
To buy 70% of interests in certain oil and gas properties in the Eagle Ford including one well producing 433 BOE/d.
In its second large deal in two weeks, Comstock Resources Inc. (NYSE: CRK) will acquire 70% of Ursa Resources Group II LLC’s interests in certain oil and gas properties in Burleson and Washington counties, Texas, for $66.5 million, the company announced Nov. 21.
The deal rounds out CRK’s $120 million new venture leasehold program that was announced during third quarter earnings, said Mike Kelly, an analyst with Global Hunter Securities. Comstock has spent $121 million since Nov. 14, when it purchased leases with Tuscaloosa Marine Shale (TMS) oil potential for about $55 million.
The Eagle Ford transaction equates to about $2,760 per net acre based on $50,000 per net flowing barrel of oil equivalent (BOE) of production,
The assets include one well producing 433 BOE/d, or 227 BOE/d net to the interests being acquired. Comstock anticipates moving one of its operated rigs to the properties in early 2014 and estimates that it will drill 10 operated wells in 2014.
The deal includes interest in 32,000 gross acres (20,000 net) that are prospective for oil in the East Texas Eagle Ford shale formation. The properties are near successful Eagle Ford shale wells drilled by other industry participants, Comstock said.
“This acquisition will allow us to extend our successful South Texas Eagle Ford shale program into East Texas,” said M. Jay Allison, Comstock CEO. “The East Texas Eagle Ford acquisition combined with the acreage the company is acquiring in the Tuscaloosa Marine Shale play will complement our successful oil drilling program in South Texas by adding multiple years of additional oil drilling inventory for Comstock.”
On Nov. 14, Comstock announced that it entered into agreements to acquire leases on 53,000 net acres in Louisiana and Mississippi for $54.5 million in aggregate consideration.
“We note that Clayton Williams has recently drilled some excellent wells in Burleson,” Kelly said, adding that one well’s initial production was 1,266 BOE/d, 95% oil.
The company said the acreage is expected to have oil potential in the TMS formation and is also near successful wells drilled by other industry players.
The company has reported more than $500 million in liquidity. On Nov. 14, Comstock said its strong balance sheet was due to the divestiture of its West Texas assets in January for $824 million. After taxes, the company gained $150 million on the sale of its Permian Basin holdings to Rosetta Resources.
Comstock expects to complete the Eagle Ford acquisition during this quarter, which is subject to customary closing conditions contained in the purchase agreement.