Fremont Petroleum Acquires Magnum Hunter Production
ASX-listed Fremont Petroleum Corporation Ltd. has entered into an agreement with privately held Blue Ridge Mountain Resources Inc. (formerly Magnum Hunter Resources Corp.) to acquire its 100%-held subsidiary Magnum Hunter Production Inc., for an aggregate purchase price of US$425,000. The transaction follows a competitive bid process which initially commenced in August last year.
Magnum’s assets include interest in ~100,000 acres of leases located across the Illinois and Appalachian Basins, with operating interests in a portfolio ~1,300 long life, low decline conventional natural gas wells located in Kentucky, Virginia, and Tennessee. The first phase of the work program includes basic pipeline repairs and is forecast to increase current production by approximately 20%, while the second phase program will target more extensive workovers, re-stimulations, and side-tracking on the 75% of the well inventory portfolio, that is currently shut in or not currently tied to production. The company has current average daily production of approximately 1,700 barrels of oil equivalent per day (boe/d), of which approximately 80% is gas.
“MHP delivers an excellent foundation to aggressively execute FPL’s acquire, enhance and produce’ strategy of growing production by working over long life, low decline conventional natural gas and oil wells in the Illinois and Appalachian Basins. The transaction increases FPL’s current well count almost tenfold to ~1,500 wells and our near-term objective is to maximize production from this portfolio, deliver dependable and meaningful cash flows which we can deploy to further grow our broader portfolio in a relatively risk-free manner. There’s tremendous opportunity to do so and we see scope to achieve much greater critical mass through our workover program and acquiring other leases with similar production and enhancement characteristics,” commented Sam Jarvis, Non-Executive Director of Fremont.
Colorado-based Fremont Petroleum is engaged in development and production activities in Colorado, Kentucky and Texas, with a primary focus on operations in the Florence Oil Field in Colorado.
Texas-based Blue Ridge Mountain Resources is engaged in the development of onshore natural gas and oil plays concentrated within the Appalachian region, and currently holds interests in the Marcellus and Utica shale formations.
The transaction is subject to customary closing conditions and is expected to be completed prior to end of March.