This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Vanguard Natural Resources To Acquire Natural Gas And Liquids Assets In Colorado And Wyoming

Vanguard Natural Resources, LLC (NYSE: VNR) (“Vanguard” or “the Company”) today announced it has entered into a definitive agreement to acquire natural gas and liquids assets in the Piceance Basin in Colorado and the Powder River and Wind River Basins in Wyoming for a purchase price of $335 million from Bill Barrett Corporation. The effective date of the acquisition is October 1, 2012 and the Company anticipates closing this acquisition on or before December 31, 2012.

Scott W. Smith, President and Chief Executive Officer, commented, “After both a successful bond and equity offering we are very pleased to sign an agreement that will put some of our new liquidity to work. These assets will be a great addition to our portfolio as they exhibit the characteristics we are looking for: a mature developed production base, predictable operating costs and significant free cash flow with very limited need for reinvested capital based on our acquisition structure.”

Significant benefits expected from the acquisition include:
  • Immediately accretive to distributable cash flow;
  • Proved reserves of approximately 300 Bcfe based on three-streams and forward strip pricing. Proved reserves are divided geographically as follows:
  Proved Reserves  

Natural Gas (Bcf)
  Oil (MMBl)   NGL (MMBl)   Total (Bcfe)  

% Proved Developed
Piceance   111.8   3.3   7.6   177.1   81%
Wind River   45.2   0.3   0.0   46.9   100%
Powder River   76.4   0.0   0.0   76.4   66%
Total   233.4   3.6   7.6   300.4   80%
  • Current net production of approximately 65 MMcfe/d divided geographically as follows:
  Current Net Production  

Natural Gas

  Oil (MBbl/d)   NGL (MBbl/d)   Total (MMcfe/d)   % Natural Gas
Piceance   17.7   0.2   1.2   26.3   67%
Wind River   10.1   0.1   0.0   10.4   97%
Powder River   28.3   0.0   0.0   28.3   100%
Total   56.1   0.3   1.2   65.0   86%
  • Reserve to production ratio of approximately 13 years;
  • Escalating working interest in Piceance Basin. Working interest begins at 18% but increases to 21% on January 1, 2014, increases to 24% on January 1, 2015 and remains at 26% beginning on January 1, 2016. This structure was designed to maintain cash flow from the acquisition without the need for any capital spending until 2016. By hedging natural gas at increasing strip pricing each successive year and having an increased working interest each successive year in the Piceance Basin we offset the impact of the expected natural production declines and consequently, the cash flow remains relatively stable through 2016;
  • Vanguard intends to significantly hedge the expected natural gas and oil production through 2016 and the expected natural gas liquids production in 2013;
  • Expands the Wyoming operating base with the addition of two offices and personnel to handle the Wind River and Powder River operations;
  • Approximately 184,000 net acres in the Wind River Basin (97% undeveloped, 12% HBP with majority of leases expiring in 2015 and beyond) and 67,000 net acres in the Powder River Basin (42% undeveloped, 93% HBP) and 4,000 net acres in the Piceance Basin (37% undeveloped, 95% HBP); and
  • Significant number of proved drilling locations in the Piceance Basin that can be drilled at attractive rates of return in a $4.50 natural gas price environment. In addition, there are a significant number of proved drilling locations in the Powder River Basin that are not economically attractive at current strip pricing but would be viable projects in an improved pricing environment.

The Company intends to fund this acquisition with borrowings under its existing reserve-based credit facility. Vanguard anticipates that after closing this acquisition and the banks perform an interim borrowing base redetermination, Vanguard will have ample liquidity to continue its growth through acquisitions strategy.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $94.19 -1.04%
FB $118.06 0.54%
GOOG $695.70 0.48%
TSLA $222.56 -4.20%
YHOO $36.00 -0.03%


Chart of I:DJI
DOW 17,651.26 -99.65 -0.56%
S&P 500 2,051.12 -12.25 -0.59%
NASDAQ 4,725.6390 -37.5850 -0.79%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs