Legacy Reserves acquires natural gas assets in Texas, US

US based Legacy Reserves has signed separate agreements with affiliates of Anadarko Petroleum and Western Gas Partners to acquire $440m of natural gas gathering and processing assets in East Texas.

The acquisition is Legacy’s first for the new basin in East Texas and adds significant natural gas gathering and processing assets to its portfolio.

The transactions are expected to be closed in the third quarter of the year.

These assets will boost Legacy’s proved reserves of almost 420 billions of cubic feet equivalent (Bcfe), of which 100% are natural gas, 95% are classified as proved developed producing, and 95% are operated.

The company expects that its third quarter production to reach about 70 Mmcfe/d this year, yielding a proved reserves-to-production ratio of 16.4 years.

Other benefits from the deal includes multi-year development plan focused on recompletions and workovers to further flatten production declines and extend productive life of the assets.

It will also add drilling inventory in a higher gas price environment and 567 miles of high-pressure pipeline and low-pressure gathering lines along with a 502 Mmcfe/d processing plant with access to five major gas markets to Legacy’s portfolio.

The firm expects NTM cash flow of nearly $60m from the acquisition.

Legacy president and chief executive officer Paul Horne said: "This acquisition represents a material entry into East Texas, a region we have wanted to enter for several years due to its long-lived, low-decline, low-cost nature and high potential for bolt-on acquisitions.

"These high-quality assets combined with the upside optionality of recompletions and a contango gas-curve make this a very attractive acquisition for us.

"The gathering and processing side will be a new operational venture for us, and one that we are confident in our abilities to execute with the anticipated addition of personnel experienced in the operation of the acquired assets.

"We believe these assets will provide a stable cash flow stream and some synergies with our upstream assets that would not exist with an outside operator."