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Penn Virginia to buy Magnum Hunter' s Eagle Ford shale properties for $401 million

BY MELODIE WARNER

HOUSTON -- Penn Virginia agreed to buy all of Magnum Hunter Resources’ (MHR) Eagle Ford Shale properties for $401 million as it looks to expand its presence in the high margin play.

Penn Virginia said it will acquire about 19,000 net mineral acres in Gonzales and Lavaca Counties, Texas, which are adjacent to its current position in both counties.

The estimated net oil and gas production for the acquired assets during February was roughly 3,200 boepd.

Penn Virginia said the assets also include working interests in 46 producing wells, raising its combined producing Eagle Ford Shale well count to 117 wells. Seven wells are in the process of being completed and four wells are being drilled on the acreage being acquired.

"This is a transformational acquisition which will add significantly to our leasehold and drilling inventory in the Eagle Ford Shale play and is highly complementary to our existing operating areas where we and Magnum Hunter have had very successful drilling results" said Penn Virginia President and CEO H. Baird Whitehead.

Penn Virginia also intends to offer $400 million of seven year, senior notes in a private placement to help finance the purchase.

The companies expect to close the Eagle Ford Shale deal by mid May.

Magnum Hunter said it will be paid $361 million in cash and has the option to receive the rest as either $40 million in cash or 10 million Penn Virginia shares worth $4 a share.

Magnum Hunter plans to use the proceeds to reduce debt and for other general corporate purposes.

Magnum Hunter said it will continue to own about 7,000 net mineral acres in the South Texas counties of Fayette, Lee and Atascosa, and it is participating in new horizontal Pearsall Shale well with Marathon Oil that is currently drilling in Atascosa County.

Dow Jones Newswires

04/03/2013

 

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