Warren Resources Exercises Preferential Rights to Acquire Anadarko's Oil & Gas and Midstream Assets in the Atlantic Rim, Washakie Basin, Wyoming
NEW YORK, Sept. 4, 2012 (GLOBE NEWSWIRE) -- Warren Resources Inc. (Nasdaq:WRES) ("Warren" or the "Company") today announced that it has exercised its preferential rights to acquire additional oil, natural gas and midstream assets from subsidiaries of Anadarko Petroleum Corp ("Anadarko") in the Atlantic Rim Project area, Washakie Basin, Wyoming. Under the preferential rights exercise, Warren has agreed to acquire:
Up to 100% of Anadarko's working interest in the Spyglass Hill Unit area within the Atlantic Rim Project, consisting of approximately 47,015 net leasehold acres and an approximate 41.5% working interest therein, for a purchase price of approximately $14.4 million for all of Anadarko's interest;
Up to 100% of Anadarko's working interest in the Catalina Unit area within the Atlantic Rim Project, consisting of approximately 4,232 net leasehold acres and an approximate 19.5% working interest therein, for a purchase price of approximately $2.6 million for all of Anadarko's interest; and
- All (100%) of Anadarko's 50% interest in the gas gathering, compression and pipeline midstream assets ("Midstream Assets") within the Atlantic Rim Project for a purchase price of $4 million.
Warren elected to exercise its preferential rights to purchase Anadarko's interests after Anadarko advised the Company of an agreement to sell these assets to a third party. Depending upon the exercise of preferential rights to purchase the oil and gas assets held by other working interest owners in the Spyglass Hill and Catalina Units, the amount of working interests to be acquired by Warren and the purchase price to be paid by Warren could be reduced proportionately. The effective date of the transaction is anticipated to be August 1, 2012 with the closing expected to occur on or about September 27, 2012. Upon the resignation of Anadarko as the current Operator, the Company anticipates it will become the successor Operator of the Spyglass Hull Unit and the Midstream Assets.
"We are pleased to have this opportunity to increase our ownership in the Atlantic Rim area and to gain 100% control of the midstream pipeline assets," said Espy Price, Chairman and CEO of Warren. "The Atlantic Rim acquisition provides us with immediate and significant increases in production and proved reserves at a very competitive price. By hedging natural gas prices through 2014, this acquisition is expected to result in attractive economics even at today's suppressed gas prices. It positions us to realize significant improvements in earnings and cash flow as gas prices recover. Additionally, the acquisition increases our large acreage position in the coal bed methane assets and the prospective, deeper formations, including the Niobrara."
Mr. Price further commented that "we anticipate the acquisition to be accretive, with targeted returns locked in by our existing gas hedges. We also believe that the purchase price of approximately $1,400 per flowing Mcf is well below recent industry transactions. Given our long-term knowledge of the Atlantic Rim assets, we also believe that, as the successor Operator, we may be able to reduce operating costs."
Warren intends to finance the acquisition with cash-on-hand and borrowings under its senior credit facility, which has a borrowing base of $130 million and $30.5 million currently available. In anticipation of closing the acquisition, the Company has entered into NYMEX (NMX) natural gas Swaps for 7 MMbtu per day at a price of $ 3.39 per MMbtu for 2013 and $3.78 per MMbtu for 2014.
About Warren Resources
Warren Resources, Inc. is an independent energy exploration, development and production company that uses advanced technologies to systematically explore, develop and produce domestic on-shore oil and natural gas reserves. Warren's activities are primarily focused on oil in the Wilmington field in California and natural gas in the Washakie Basin in Wyoming.
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Warren believes that its expectations are based on reasonable assumptions. No assurance, however, can be given that such expectations will prove to have been correct. A number of factors could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this news release, including Warren's ability to obtain certain approvals, our ability to satisfy closing conditions, unexpected costs, inability to timely realize expected value from the acquisitions, decisions by other working interest owners, the volatility of oil and natural gas prices, our success in discovering, estimating, developing, producing and replacing oil and natural gas reserves, the availability and terms of capital, the effect of our hedging activities, changes in economic conditions, regulatory changes, and other factors, many of which are beyond our control drilling risks, all of which could adversely impact Warren's ability to consummate the transactions described in this news release. See "Risk Factors" in the company's 2011 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other public filings and press releases. Warren undertakes no obligation to publicly update or revise any forward-looking statements.
CONTACT: Media Contact: David Fleming 212-697-9660
Source: Warren Resources, Inc. 2012 GlobeNewswire, Inc.