Questar Subsidiary Wexpro Announces Acquisition
Company investing $106.4 million to increase working interest in
SALT LAKE CITY--(BUSINESS WIRE)--
Questar Corporation (NYSE:STR) today announced that its subsidiary,
Wexpro Company, has entered into a definitive agreement to acquire an
additional interest in natural gas-producing properties for $106.4
million. Wexpro is increasing its working interest in existing
Wexpro-operated wells in the Trail Unit of southwestern Wyoming's
Vermillion Basin. Essentially, this a "bolt-on" acquisition to the
company's current Trail assets, which are governed by the 1981 Wexpro
Agreement for the benefit of Questar's Utah and Wyoming utility
Under the terms of the original Wexpro Agreement, Wexpro produces gas
from certain properties at cost of service. The recently approved Wexpro
II Agreement perpetuates that model. Wexpro II stipulates that all
Wexpro acquisitions within the footprint of the 1981 agreement must be
offered to the public service commissions of Utah and Wyoming for
inclusion as cost-of-service properties benefiting Questar's utility
customers. Properties submitted but not approved by regulators would be
developed and operated by Wexpro, either at cost of service for other
parties or as traditional market-based oil and gas properties.
"We are excited to add this acquisition to our portfolio," said Ron
Jibson, Questar chairman, president and CEO. "It's in the heart of our
operations and adds value to one of our premier assets."
Wexpro already owns 46 percent working interest in the properties being
acquired; this acquisition will increase that interest to 88 percent. It
will also add an estimated 118 billion cubic feet equivalent (Bcfe) of
net proved reserves, about 45 percent of which (53 Bcfe) are currently
proved-developed. Wexpro estimates proved plus probable and possible
reserves attributable to the properties to be 195 Bcfe. In addition to
78 producing wells, Wexpro has identified 172 additional well locations
for future development on a combination of 20- and 40-acre spacing. The
development targets Mesaverde sands (Almond, Canyon Creek and Trail)
that Wexpro has developed for several years. Wexpro estimates average
gross reserves attributable to each future Mesaverde well to be 2 Bcfe
to 3 Bcfe, with well costs between $1.7 and $2.1 million.
"Trail's repeatable low-risk development locations are ideal for
Wexpro's business model. Finding costs in this region over the last two
years have been below $1.00/Mcfe," said Jim Livsey, Wexpro's executive
vice president and COO.
The company expects to close the transaction by the end of August. Upon
closing, the company estimates the asset could yield incremental
production of about 2.6 Bcfe net to Questar in the remaining four months
of 2013 and be immediately accretive to earnings.
About Questar Corporation
Questar is a Rockies-based integrated natural gas company with an
enterprise value of about $5.5 billion, operating through three
Questar Gas Company provides retail natural gas distribution in
Utah, Wyoming and Idaho;
Wexpro Company develops and produces natural gas from
cost-of-service reserves for Questar Gas customers; and
Questar Pipeline Company operates interstate natural gas
pipelines and storage facilities in the western U.S. and provides
other energy services.
Questar is headquartered in Salt Lake City, Utah.
Investors: Tony Ivins, 801-324-5218
Chad Jones, 801-324-5495
Source: Questar Corporation
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