Energen To Tack On Additional 3,200 Wolfberry Acres

To buy TX Wolfberry assets covering 3,200 net acres in Midland County featuring 29 producing wells, gaining 8.5 MMMBOE 2P.

Energen Resources, the E&P subsidiary of Energen Corp., Birmingham, Ala., (NYSE: EGN) plans to buy a primarily proved-undeveloped Texas Wolfberry package from an undisclosed private seller for $65.8 million.

The deal includes 3,200 net acres in Midland County, adding to the company’s Wolfberry position in the Permian Basin. The acquisition package includes 29 producing wells and an estimated 50 undeveloped locations. Energen Resources does not plan to begin developing this acreage before 2013.

Proved and probable reserves are approximately 8.5 million barrels of oil equivalent (80% proved undeveloped).

PLS Inc. was financial advisor to the private seller.

The deal is expected to close by the end of February.

Caris & Co. vice president, E&P, Gabriele Sorbara estimates the deal values the land at approximately $20,563 per acre and proved and probable reserves at $7.74 per barrel equivalent.

“We believe a fair valuation was placed on these assets, and the price tag compares favorably to its last Wolfberry packages totaling $211.9 million (announced in October 2011) for a valuation of $25,301 per acre (simple math), $8.34 per proved and probable barrel equivalent and $141,267 per flowing barrel equivalent per day,” she says.

Sorbara adds the transaction does not come as a surprise and Caris & Co. expect management to continue to be opportunistic in building further scale in the Permian Basin, especially in the low-risk vertical Wolfberry play.