An oil and gas sponsor’s public offering recently announced the purchase of 67 producing oil and gas wells in the Eagle Ford Shale along the borders of Frio and Lasalle counties of Texas.
Reef Oil & Gas Drilling and Income Fund, L.P. (the Fund), managed by Texas-based Reef Oil & Gas Companies (Reef), spent $11.25 million to acquire the producing wells and additional drilling locations for future wells in an estimated 108 locations. Reef expects that the properties will see drilling activity for about seven more years.
According to the Rail Road Commission of Texas, the regulator of oil exploration and production for the state, the Eagle Ford Shale play has seen tremendous activity growth. In 2011, there were only 368 producing oil leases compared to 2,521 in 2013.
“Our Eagle Ford acquisition adds depth to the fund and we couldn’t be happier that it is in arguably one of the most attractive shale plays in the world right now. We can get production moved quickly to the Gulf Coast because of the mature infrastructure in the area,” commented Mike Mauceli, President and CEO of Reef in a statement.
Cheyenne Petroleum Co. operates the acreage block which includes 18 proved undeveloped wells expected to be drilled or completed before the end of the year. The Fund will gain about 120 barrels of oil equivalents per day to its production.
Reef estimates the acquisition will also add to the partnership proved reserves of 701,000 barrels of oil equivalent and probable / possible reserves of 510,463 barrels of equivalents from the undeveloped locations.
The Fund also has interests in North Dakota’s oil rich Bakken – Three Forks area.
“We’re excited to add this quality package in the Eagle Ford Shale to the Partnership’s investment base,” CFO Dan Sibley said. “The addition of this project with our acquisitions in the Bakken-Three Forks area of North Dakota not only adds diversification over a large number of wells, but also enhances geographical divergence to the fund.