Newfield Exploration Company to Acquire Inland Resources

abarrelfullabarrelfull wrote on 03 May 2015 18:47

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Friday, August 6 2004

Newfield Exploration Company (NYSE: NFX) today announced that it has signed an agreement to acquire Inland Resources in a privately negotiated transaction valued at $575 million plus working capital and oil inventory at closing, including the assumption of debt and other existing obligations. The acquisition establishes a new Rocky Mountain focus area for Newfield and adds a legacy asset to its portfolio.

Inland Resources is a privately held company based in Denver, Colorado. Inland's major asset is the 110,000-acre Monument Butte Field, located in the Uinta Basin of Northeast Utah. Inland operates the Monument Butte Field and has an average working interest of about 80%. Newfield estimates that the giant Monument Butte Field has oil in place of more than two billion barrels. Through this transaction, Newfield will acquire an internally estimated 326 billion cubic feet equivalent (Bcfe) of proved reserves and 439 Bcfe of probable reserves. The reserves are 85% oil and are 70% proved undeveloped. Current net production is approximately 7,000 barrels of oil equivalent per day (BOEPD). Newfield expects to double production by the end of 2006. Production is expected to be 10,500 BOEPD in 2005 and 14,000 BOEPD in 2006. Three rigs are currently drilling in the field.

Pro forma for this acquisition, Newfield's proved reserves will be approximately 1.7 trillion cubic feet equivalent (Tcfe), of which 77% will be proved developed and 70% will be natural gas. The transaction will lengthen Newfield's reserve life by nearly 20% to approximately seven years.

Newfield intends to finance the transaction with a combination of debt and equity. Newfield expects the transaction to be accretive to cash flow from operations and earnings in 2005 and beyond. Subject to customary closing conditions, the transaction is expected to close in late August or early September 2004.

Newfield President and CEO, David A. Trice, said, "This transaction adds a new dimension to Newfield's portfolio — long-lived reserves with an increasing production profile. The Monument Butte Field is an under exploited legacy asset. It offers the opportunity for a well financed, technically driven company like us to drill hundreds of wells and to apply current and future technology to grow production for the next 10 years. This acquisition places Newfield on the map in the Rockies, an area in which we intend to grow in the future.

"The current market for long-lived natural gas reserves is intensely competitive. In our opinion, better values are available in crude oil assets. This is particularly true in view of the futures market for crude oil which continues to exceed expectations and offers opportunities to assure historically high future prices through appropriately structured hedging transactions."

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