Legacy Reserves LP is to purchase natural gas properties and gathering and processing assets in East Texas.
This is a new region for the company, whose oil and natural gas properties are mainly located in the Permian Basin, Rocky Mountain and Mid-Continent regions of the United States.
Under separate agreements with affiliates of Anadarko Petroleum and Western Gas Partners, Legacy will purchase the assets for a total of $440 million.
The transactions include estimated proved reserves of approximately 420 Bcfe, of which 100 percent are natural gas, 95 percent are classified as proved developed producing, and 95 percent are operated. Production in the third quarter of 2015 will reach approximately 70 Mmcfe/d, yielding a proved reserves-to-production ratio of 16.4 years.
Legacy will also acquire gathering and processing operations supporting the natural gas properties, including 567 miles of high-pressure pipeline and low-pressure gathering lines and a 502 Mmcfe/d processing plant with access to five major gas markets.
The acquisitions are expected to be completed before the end of the third quarter. Legacy noted that the purchase prices remain subject to customary adjustments.
“This acquisition represents a material entry into East Texas, a region we have wanted to enter for several years due to its long-lived, low-decline, low-cost nature and high potential for bolt-on acquisitions,” commented Paul Horne, Legacy’s president and CEO.
“The gathering and processing side will be a new operational venture for us, and one that we are confident in our abilities to execute with the anticipated addition of personnel experienced in the operation of the acquired assets,” Horne added.