QR Energy Beefs Up Permian, Ark-La-Tex, Midcontinent Holdings

Acquired 109,305 net acres of Permian Basin, Ark-La-Tex & Midcontinent concentrated in TX, OK & NM featuring1,574 gross wells, gaining 8,000 BOE/d, 37.1 MMBOE proved.

QR Energy LP, Houston, (NYSE: QRE) has acquired oil and gas properties from its sponsor, Quantum Resources Fund, managed by Houston-based private-equity fund Quantum Energy Partners, for $577 million in cash and debt.

QR Energy will issue $350 million of convertible preferred units to Quantum Resources Fund and pay $227 million in cash from borrowings in its existing bank credit facility.

The assets include properties in existing core areas in the Permian Basin, Ark-La-Tex and Midcontinent. The properties feature 1,574 gross (960 net) producing oil and gas wells on approximately 109,305 net acres concentrated in Texas, Oklahoma and New Mexico.

Net production for the fourth quarter is projected to be 8,000 barrels of oil and gas equivalent. Proved reserves as of Oct. 1 are approximately 37.1 million barrels of oil equivalent (65% proved developed, 41% liquids).

Upside includes numerous low-risk development opportunities.

QR Energy chief executive Alan L. Smith says, “This acquisition from our sponsor has assets that fit our investment criteria of mature, longer life properties and more than doubles QR Energy's production and reserves. The properties are located in our existing core areas and offer an inventory of low-risk development projects that will supplement our production in the years to come.”

The deal is expected to close by Oct. 1.