Chesapeake to acquire Tulsa's BRG Petroleum

Monday, December 27th 2004, 10:57 am
By: News On 6

TULSA, Okla. (AP) _ Chesapeake Energy Corp. has agreed to purchase BRG Petroleum Corp. for $325 million in cash, Chesapeake said Monday in announcing its 10th acquisition of 2004.

Chesapeake, already the No. 1 producer of Oklahoma oil and gas, would add to its fields and reserves in Arkansas, Louisiana, Texas and Oklahoma, particularly in northwest Oklahoma's Sahara fields.

``We believe Sahara is one of the great gas resources plays in the (United States) and fortunately from a competitive standpoint, one of the least recognized by the industry,'' said Chesapeake chief executive Aubrey K. McClendon.

Oklahoma City-based Chesapeake increased its 2005 oil and natural gas production forecast by 2.8 percent and its 2006 forecast by 4.3 percent after adding Tulsa-based BRG, a private oil and gas producer.

Shares of Chesapeake were off 30 cents, or 1.8 percent, at $16.36 Monday morning on the New York Stock Exchange.

Chesapeake has announced 10 acquisitions in 2004 for a total of $1.7 billion, taking advantage of high oil and gas prices to bolster the company's asset base.

In May, Chesapeake announced plans to acquire Greystone Petroleum LLC for $425 million. In July, the company announced it was buying three small oil and gas companies for $590 million. Its acquisition of north Texas properties from Hallwood Energy for $292 million closed Dec. 15.

In addition, Chesapeake closed its $510 million acquisition of Concho Resources Inc., originally announced last year, in February.

The BRG deal is expected to close Feb. 1, subject to regulatory approval, Chesapeake said.

Chesapeake would add BRG's proved reserves of 223 billion cubic feet of natural gas equivalent, which are 93 percent gas, bringing its proved reserves to 4.8 trillion cubic feet of gas equivalent.

Proved reserves have increased by more than 1 trillion cubic feet of gas equivalent in 2004 through acquisitions.

BRG's production properties produce about 30 million cubic feet of gas a day, but Chesapeake said additional drilling could increase that to 70 million cubic feet by December 2006.

Chesapeake said it now expects to produce 1.19 billion cubic feet of gas equivalent per day in 2005 and 1.33 billion cubic feet per day in 2006.