Vanguard Natural Resources has signed an agreement with an unnamed source to acquire natural gas and oil properties in the Pinedale and Jonah fields of south-western Wyoming, US, for $581m.
The Pinedale and Jonah field properties comprise about 87,000 gross acres that are producing around 113.4mmcfe per day at present with approximately 80% being natural gas, 4% oil and 16% natural gas liquids.
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Vanguard Natural Resources president and CEO Scott Smith said the acquisition of an interest in such a prolific natural gas field is a milestone event for the company.
"At closing, our reserves and daily production will increase approximately 80% and 55% respectively, and we will add an inventory of approximately 970 proved undeveloped drilling locations," Smith added.
The new property represents a start to the company’s acquisition programme for 2014, and is said to be an addition to its portfolio of long life, mature assets.
Vanguard Natural Resources executive vice president and chief financial officer Richard Robert said the acquisition represents an important shift in the Vanguard strategy, as the company will be allocating capital to drilling wells on these acquired properties which is expected to not only maintain cash flow but grow cash flow.
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By GlobalData"Based on the numerous proved undeveloped drilling locations and the current number of drilling rigs in use by the operators, this combined maintenance and growth capital programme will be sustainable for over ten years," Robert added.
With the change in strategy, Vanguard will also be able to compete for new acquisitions containing mature stable production as well as a significant inventory of undeveloped drilling locations.
The acquisition, which will be immediately accretive to distributable cash flow at closing, will be funded by the company with borrowings under its existing reserve-based credit facility.
Vanguard hopes to close the acquisition on or before 31 January 2014.
