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XTO Energy buys leases in Fayetteville Shale play.

XTO Energy Inc. of Fort Worth has entered into a definitive agreement to buy producing properties, leasehold acreage and gathering infrastructure from a Southwestern Energy Co. subsidiary for about $520 million. The purchase includes 55,631 net acres of Fayetteville Shale leasehold and expands XTO's position in the shale play to more than 300,000 net acres, the company said.

"XTO's shale play strategy is focused on growing our acreage positions in the right geographic and geological locations across the premier shale basins," the company said in a news release.

"This acquisition expands our visible growth potential in the Fayetteville Shale," said Keith A. Hutton, president. "Given our engineering assessment, we expect the acreage, which is contiguous to our core development footprint, to hold resource potential in excess of 1 Tcfe."

Southwestern Energy said the land it sold accounts for about 6 percent of its holdings in the play.

"The sale of this acreage is in keeping with our focus on present value and our strategy of rationalizing our assets to fund our capital program," said Harold M. Korell, Southwestern's president and CEO. "Results have been improving in recent quarters in the Fayetteville Shale project, our James Lime drilling looks promising, and we are now drilling our first Marcellus Shale test.

"This sale, along with our planned utility and potential Permian sales, will meet our 2008 capital needs and position us well as we move into 2009."

Pipeline infrastructure is already in place, so XTO said it plans to use four drilling rigs in 2008 and at least six in 2009.

"We expect proved reserves attributable to this acquisition to grow to 160 Bcfe this year and at least 325 Bcfe by year-end 2009. Overall, our operational teams are dedicated to making XTO a top producer and value creator in the Fayetteville Shale," Hutton said.

The acquisition is set to close by May 5.
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Title Annotation:ENERGY
Author:Turner, Lance
Publication:Arkansas Business
Date:Apr 7, 2008
Words:314
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