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BG Group has
announced the closing of the upstream and midstream acquisitions as part
of the previously announced alliance with EXCO Resources Inc. (NYSE:XCO).
After closing
adjustments to make the economic effective date of the upstream
acquisition and joint development operations 1 January 2009,
consideration for the upstream portion of the alliance is US$1 127.0m.
This consists of US$727.0m plus US$400m to be paid as a carry of 75% of EXCO's future costs to develop the Haynesville shale
gas. Following similar closing adjustments, the consideration paid for
the midstream portion of the alliance is US$269.2m.
Under the terms of
the alliance, BG Group has:
- Acquired 50% interest in
120 000 net acres in EXCO's upstream
leases in a defined area of East Texas and North Louisiana, which
encompasses the Haynesville shale, the prospective Bossier shale and
the Cotton Valley tight gas sands formations;
- Added 2.6 trillion
standard cubic feet (tcf) to BG Group's
net potential resources, with current net production of 90 million
standard cubic feet per day (mmscfd),
anticipated to increase to some 250 mmscfd
in 2012, net to BG Group;
- Acquired a 50% interest
in a newly formed company that will hold related and complementary
EXCO gas-gathering and transportation assets and entered into
agreements to support the joint development and growth of these
assets; and
- Entered into a joint
development agreement with EXCO to co-operate in the development and
production of onshore shale and tight gas resources across 14
counties and parishes in East Texas and North Louisiana.
Both the midstream
and upstream transaction were granted regulatory approval by the Federal
Trade Commission on 17 July.
-ends-
BG Group
BG Group plc (LSE: BG.L) is a world leader in natural gas, with a
strategy focused on connecting competitively-priced resources to
specific, high-value markets. Active in 27 countries on five continents,
BG Group has a broad portfolio of exploration and production, Liquefied
Natural Gas (LNG), transmission and distribution and power generation
business interests. It combines a deep understanding of gas markets with
a proven track record in finding and commercialising reserves. For
further information visit: www.bg-group.com
EXCO
EXCO is an oil and natural gas exploration, exploitation, development and
production company headquartered in Dallas, Texas with principal
operations in east Texas, north Louisiana, Appalachia, west Texas and the
mid-continent areas of the US.
Upstream
assets
The acreage acquired includes the Oakhill, Holly, Kingston, Caspiana, Danville, Longwood/Waskom, Carthage and
Minden fields and excludes EXCO's Vernon,
Redlands, Gladewater and Overton fields.
Haynesville
shale
The Haynesville shale gas play extends across parts of east Texas and
north Louisiana, covering approximately 12 950 square kilometres. EXCO
and BG's leasehold portfolio comprises approximately 84 000 net acres
that are prospective or producing from the Haynesville. EXCO has drilled
and completed 12 Haynesville horizontal wells to date. Eleven of these
have been drilled in DeSoto Parish and have
achieved an average initial production rate of 24 mmscfd.
Cotton
Valley tight gas sands
The Cotton Valley tight gas sands is a mature play covering large portions
of east Texas and north Louisiana. Cotton Valley operations are
characterised by long-life proved developed reserves and high drilling
success rates. The Cotton Valley overlies the Bossier shale at depths of
approximately 2
133 metres to 2 743 metres. EXCO's net Cotton Valley acreage is approximately 120
000 leasehold acres. As of December 31 2008, EXCO reported that the
Cotton Valley and other shallow rights included approximately 414 billion
cubic feet equivalent (bcfe) of net proved
reserves and approximately 445 bcfe of net
probable and possible reserves, based on year-end SEC pricing.
Bossier
shale
The Bossier shale is a gas bearing shale that directly overlies the
Haynesville. Recent successful completions in this interval by operators
in east Texas and north Louisiana suggest that this gas rich interval may
also be commercially viable with improvements in gas price or advances in
drilling and completion technology.
Midstream
assets
The newly formed midstream company, TGGT Holdings LLC, includes the TALCO
and TGG gas-gathering and intrastate pipeline systems. These systems
deliver EXCO, BG and third party production to markets in Louisiana and
Texas and are connected to major intrastate and interstate gas
transmission pipelines serving markets across the Midwest and Eastern US.
TGGT currently has in
excess of 700 miles
of pipeline and gathering assets in the area and is constructing a 29 mile, 36"
diameter header system to transport its Haynesville gas production. Throughput
in the midstream business to be contributed to the joint venture is
approximately 482 mmscfd of which approximately
51% is EXCO gas and 49% is third party gas.
Shale
Gas
Shale gas is natural gas stored in organic rich rocks such as
dark-coloured shale, interbedded with layers of
shaley siltstone and sandstone. Shale can be
the source, reservoir and the seal for the gas. Shale gas plays are
classified as a "continuous" type gas accumulations extending
throughout large areas, typically with low permeability and perhaps
natural fractures.
Shale gas is
considered an unconventional source as the gas may be attached to or
"adsorbed" onto organic matter. The gas is contained in
difficult-to-produce reservoirs that require special horizontal
completions and fracture stimulation techniques to achieve economic
production. Shale gas may also be contained in thin porous silt, sand and
calcite beds interbedded in the shale.
Shale gas has become
an increasingly important source of natural gas in the United States over
the past decade.
Advisors
Deutsche Bank served as advisor to BG Group.
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Media
contacts - UK:
Edel McCaffrey: +44 (0) 118 929 3508
Jo Thethi: +44 (0) 118 929 3110
Out of Hours Media Mobile:
+44 (0) 7917 185 707
Media
contacts - US:
Susan Richardson: +832 366 6307
Investor Relations
Investor
Relations: +44 (0) 118 929 3025
There are matters
discussed in this media information that are forward looking statements. Such
statements are only predictions and actual events or results may differ
materially. For a discussion of important factors which could cause
actual results to differ from the forward looking statements, refer to BG
Group's annual report and accounts for the year ended 31 December 2008. BG
Group does not undertake any obligation to update publicly, or revise,
forward looking statements, whether as a result of new information,
future events or otherwise, except to the extent legally required.
Copyright � 2009 BG
Group, All rights reserved.
BG Group plc, 100 Thames Valley Park, Reading,
Berkshire, RG6
1PT
Registered in England
& Wales
No. 3690065
VAT: GB 232177091
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