Warren Resources to buy Citrus Energy Marcellus assets

Warren Resources has agreed to acquire Marcellus assets from Citrus Energy along with two additional working interest owners in a deal worth $352.5m.

The assets are producing around 82 million net cubic feet a day (mmcfd) of natural gas as of June. Warren’s independent petroleum engineering company Netherland, Sewell & Associates estimates that net proved reserves, as of 1 July, total 208.3 billion cubic feet, of which 55% are proved developed.

The transaction is expected to increase Warren’s pro forma net production by over 200% to around 118 million cubic feet equivalent a day (mmcfed) of gas from 36 mmcfed, while the company’s pro forma net proved reserves will grow by more than 100% to 410.8 billion cubic feet equivalent (bcfe) from 202.5 bcfe.

Warren will operate the acquired assets with 100% interest. Complete midstream infrastructure is currently in place.

Warren Resources chairman and CEO Philip Epstein said that the acquisition provides the company with scale and diversification into a new core basin and uses its 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," Epstein added.

"Our technical teams are optimistic about the potential to identify additional reserves, both in the Lower and Upper Marcellus, and we believe that we can achieve strong production results in both of these zones."

The management personnel from Citrus will join Warren after completion of the transaction. Citrus president and co-founder Lance Peterson and other employees will join Warren’s board.