Legend Natural Gas acquires Barnett Shale, South TX assets for combined $1B

By Oil & Gas Financial Journal staff

Legend Natural Gas IV LP, a Houston-based limited partnership managed by Legend Natural Gas LLC, came forward March 3 as the purchaser of Range Resources Corp.’s  (NYSE: RRC)  Barnett Shale assets as it detailed the recent signing of two oil and gas asset acquisition agreements totaling nearly $1 billion.

Barnett Shale
Legend will acquire the Barnett Shale properties from a subsidiary of Range Resources for approximately $900 million. The properties include 390 producing wells and approximately 52,000 net acres. Current daily net production from the properties is 113 MMcfe per day (86% gas). The sale is expected to close in late April with an effective date of February 1, 2011. 

Range is selling the assets to help fund its 2011 capital spending program.

A Jefferies & Co. Inc. research note put the implied transaction price at roughly $8,000 per flowing mcfe, below the rate of Talon Oil & Gas LLC’s Barnett assets sold to EnerVest in late 2010 at roughly $11,100 per flowing mcfe.  

Vicksburg
The second acquisition consists of conventional Vicksburg production in South Texas. The company will acquire a majority interest in the Samano and Santa Fe Vicksburg fields from Smith Production Inc. for roughly $99.2 million. The fields are in Starr and Hidalgo Counties, Texas, located 20 miles from Legend's West La Grulla Field. The properties include 83 operated wells which are producing 8.8 MMcfe per day net (65% gas) and approximately 7,200 net acres. Closing of the sale is expected in late March with an effective date of January 1, 2011.

Legend will serve as the operator of all the newly acquired properties.

Funding for the acquisitions is being provided by the Riverstone/Carlyle Global Energy and Power Funds, a group of energy-focused private equity funds managed by Riverstone Holdings LLC.

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