Atlas Resource Partners (ARP) entered into a definitive agreement to acquire total reserves of approximately 47 million barrels of oil equivalent (MMboe) of oil and natural gas liquids (NGLs), including proved developed producing reserves of approximately 25Mmboe, for USD 420M. The acquired position is located in the Rangely field in northwest Colorado, a mature tertiary CO2 flood with low-decline oil production. The transaction is expected to close in the second quarter 2014, with an effective date of 1 April 2014.
The acquired assets are expected to provide ARP with a stable, high-margin cash flow stream with a low-decline profile with an average 3–4% annual decline rate over the past 15 years. The asset position is a tertiary oil recovery project using CO2 flood activity, and the production mix is predominantly oil at 90%, with the remainder coming from NGLs. ARP will have an approximate 25% non-operating net working interest in the assets, and Chevron Corporation will continue as operator. Material capital expenditures and growth projects are subject to ARP's approval.
Edward E. Cohen, chairman and CEO of ARP, commented, "We welcome the opportunity to work once again with Chevron. These are ideal assets for our MLP – long-lived, low-decline, but with upside potential from over 20MMboe of undeveloped reserves."