The agreement includes the purchase of 97 billion cubic feet equivalent (bcfe) of proven reserves and 36bcfe of estimated probable reserves. Current net production from these assets is approximately 17.5 million cubic feet equivalent per day. The purchase price for these properties is $235 million, or $2.42 per thousand cubic feet equivalent of proven reserves, subject to accounting and purchase price adjustments customary with acquisitions of this type.
These assets are being purchased from EnerVest and certain of its affiliated parties and co-venturers. Fidelity will be the operator of the newly acquired assets and expects to drill approximately 25 wells in 2008 to further develop the properties. The acquisition is expected to be accretive to 2008 earnings per share and financed through a combination of internal funds and other borrowings.
Terry Hildestad, president and CEO of MDU Resources, said: This acquisition is in an area where we have experience and fits well with our existing operations. These lower risk development properties strengthen our strategy of having a balanced portfolio of assets and add production in an actively developing area. Combined with our active exploratory programs in the Bakken Play in North Dakota and the Paradox Basin in Utah, we expect to be well-positioned for the future.