(By Balaseshan) BreitBurn Energy Partners L.P. (NASDAQ: BBEP) said it agreed to buy oil properties located in the Belridge Field in Kern County, California.
The oil properties were acquired by BreitBurn for about $40 million in cash and 3.01 million common units representing limited partner interests in BreitBurn.
The cash consideration for the acquisition will be funded with borrowings under a bank credit facility. The common units to be issued as partial consideration for the acquisition will be issued in a private placement.
The highlights of the acquisition include: immediately accretive to distributable cash flow per unit upon closing; estimated reserve life index of over 12 years based on estimated proved reserves; and 100 percent operated with 100 percent working interest.
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The highlights also include: estimated average daily net production of about 825 Boe/day as of October 2012 (85 percent oil); estimated proved reserves of about 3.8 MMBoe as of November 1, 2012, plus additional potential resources; and oil production is currently 29 API gravity and price received currently averages Brent minus about 1 percent.
"The Belridge Field is one of the largest fields in California, with significant oil in place, and these long-lived assets will provide us with attractive growth opportunities to further increase our oil drilling inventory," said Hal Washburn, BreitBurn's CEO.
The company said these assets will add to its high quality California oil production being sold based on Brent crude, which is currently priced at about $110 per barrel, representing a significant premium over WTI.
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"This is our fourth acquisition in 2012, bringing the total value of the acquisitions year to date to over $400 million, demonstrating our ongoing commitment to our growth through acquisitions strategy," said Washburn.
The acquisition is subject to closing conditions and purchase price adjustments and is expected to close in 2012.
BBEP is trading up 1.69 percent at $18.07 on Friday. The stock has been trading between $16.06 and $20.47 over the past 52 weeks.