BIRMINGHAM, Ala.--(BUSINESS WIRE)--Energen Corporation (NYSE: EGN) today announced that its oil and gas exploration and production company, Energen Resources Corporation, has purchased five-year leases for more than 11,000 net acres in the Bone Spring and Avalon shale trends in the Permian Basin in the Texas General Land Office sealed bid sale. The total purchase price was $37 million.
Based on 320-acre spacing, the company estimates that the acreage, primarily in Reeves County, offers the potential for approximately 30 Bone Spring locations and 30 Avalon shale locations.
A horizontal drilling play targeting the 3rd Bone Spring sands at a vertical depth of 11,000-11,300 feet, the typical 3rd Bone Spring well has an estimated ultimate recovery (EUR) of 400-500 thousand barrels of oil equivalents (MBOE); Energen Resources’ drilling and completion costs are approximately $7.5 million per well. As operator, Energen has drilled and completed 11 Bone Spring wells and currently is drilling four more. The Company plans to drill another 11 wells in the 3rd Bone Spring sands by year-end 2011.
The Avalon shale offers a horizontal oil play at a vertical depth of 8,500-9,000 feet. Energen Resources believes that the EURs could be approximately 300-350 MBOE, with well costs of some $5.5 million. The Company currently is completing its first Avalon shale well.
Together with existing acreage, the new leases bring Energen Resources’ total 3rd Bone Spring position to more than 61,000 net undeveloped acres with 180 potential drilling locations (based on 320-acre spacing); the Company’s total Avalon shale position is estimated to be more than 91,000 net undeveloped acres with 280 potential drilling locations (based on 320-acre spacing).
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TOTAL ACRES AND POTENTIAL DRILLING LOCATIONS |
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| 3rd Bone Spring | Avalon Shale | |||||
| Net Acres – Undeveloped | 61,000 | 91,000 | ||||
| Potential Drilling Locations (320-acre spacing) | 180 | 280 | ||||
Energen Corporation is a diversified energy holding company with headquarters in Birmingham, Alabama. Its dominant business is the acquisition, development, and exploration of oil, natural gas, and natural gas liquids. Through Energen Resources Corporation, the company has more than 615 million barrels of oil-equivalent proved, probable, and possible reserves. These all-domestic reserves are located mainly in the San Juan and Permian basins. Energen subsidiary Alabama Gas Corporation is the largest distributor of natural gas in Alabama and has a business heritage in the state spanning more than 150 years. For more information, go to http://www.energen.com.
This release contains statements expressing expectations of future plans, objectives and performance that constitute forward-looking statements made pursuant to the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. Except as otherwise disclosed, the Company's forward-looking statements do not reflect the impact of possible or pending acquisitions, divestitures or restructurings. We undertake no obligation to correct or update any forward-looking statements, whether as a result of new information, future events or otherwise. All statements based on future expectations rather than on historical facts are forward-looking statements that are dependent on certain events, risks and uncertainties that could cause actual results to differ materially from those anticipated. In addition, the Company cannot guarantee the absence of errors in input data, calculations and formulas used in its estimates, assumptions and forecasts. A more complete discussion of risks and uncertainties that could affect future results of Energen and its subsidiaries is included in the Company's periodic reports filed with the Securities and Exchange Commission.