Warren makes Marcellus splash

Pennsylvania purchase: Warren Resources buys Marcellus patch

New York-based independent Warren Resources has agreed to acquire the Marcellus shale assets of Colorado private Citrus Energy for $352. 5 million.

The assets being sold are said to lie in the "core of the core" of the Marcellus in Wyoming County, Pennsylvania.

The purchase and sale agreement will see Warren Resources buy out Citrus Energy and two additional working interest owners using a $40 million share placing and fully committed debt financing.

Warren Resources chief executive Philip Epstein said the deal "provides Warren with scale and diversification into a new core basin and leverages Warren's engineering and operational expertise in exploiting known geologic resources".

"We are acquiring some of the most economic wells in the 'core-of-the-core' Marcellus, directly south of Cabot's position," he added.

The assets are currently producing around 82 million net cubic feet per day of natural gas, with independently estimated reserves of 208.3 billion cubic feet, 55% of which is proved developed.

Citrus Energy co-founder and president Lance Peterson is to join Warren's board under the deal, which will also see certain key technical, operating and land personnel remain in their jobs.

Warren Resources said the buy would more than double its current net production from California oil and Wyoming natural gas assets, as well as giving it access to substantial cash flow in a new focus basin.

The company has obtained committed financing from Bank of Montreal and its affiliates to increase in its senior secured credit facility from $300 million to $750 million, along with an increase in the borrowing base from $175 million to $225 million in conjunction with the acquisition.

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