Warren Resources Completes Acquisition of Magness Petroleum Company's Interest in the Wilmington Unit in California
February 02 2005 - 9:22AM
PR Newswire (US)
Warren Resources Completes Acquisition of Magness Petroleum
Company's Interest in the Wilmington Unit in California NEW YORK,
Feb. 2 /PRNewswire-FirstCall/ -- Warren Resources, Inc. (NASDAQ:
WRES) ("Warren") announced today that it has completed the
acquisition from Magness Petroleum Company and Next Generation
Investments, LLC (collectively, "Magness") of all of Magness's
right, title and interest in the Wilmington Townlot Unit No. 1,
Wilmington California (the "Wilmington Unit"), pursuant to the
Purchase and Sale Agreement dated as of November 24, 2004 for a
price of $14.8 million in cash (the "Acquisition"). The closing is
effective as of January 1, 2005. Additionally, effective February
1, 2005, Warren's wholly owned operating subsidiary, Warren
E&P, Inc., was elected operator of the Wilmington Unit. As a
result of the Acquisition, Warren has increased its holdings to an
approximate 98.5% working interest in the Wilmington Unit. As of
December 31, 2004, there were 31 gross producing wells in the
Wilmington Unit producing approximately 450 barrels of oil per day.
The Wilmington Unit is a unitized oil field consisting of 1,440
gross (1,418 net) acres, which has produced more than 149 million
barrels of oil, mostly from primary production. All the working
interests in the Wilmington Unit are subject to the terms and
provisions of a unit operating agreement. Warren has planned an
$18.4 million capital expenditure drilling budget for the
Wilmington Unit in 2005 to drill 29 gross wells using directional
and horizontal drilling and secondary recovery techniques, such as
drilling wells in a water flood pattern to enhance oil recovery.
Warren financed the Acquisition through the proceeds from a private
placement of its common stock and warrants, which closed on
November 30, 2004. Norman F. Swanton, Chairman and CEO of Warren,
noted "We are very pleased to have successfully completed this
transaction. With the acquisition of these assets, Warren can begin
to aggressively develop the Wilmington Unit. We believe that the
existing Wilmington Unit proved undeveloped reserves, extensive oil
storage and pipeline infrastructure and access to the California
markets can add significant near term value to our shareholders.
Additionally, Warren's total estimated net proved reserves as of
June 30, 2004, adjusted as if the Acquisition had occurred on June
30, 2004 and utilizing average realized pricing of $32.49 per
barrel oil and $5.09 per Mcf of natural gas as of that date, would
increase to approximately 124.1 Bcfe from 99.5 Bcfe and the
estimated future net revenue from our proved reserves discounted at
10% (PV-10) would increase to approximately $236.2 million from
$186.4 million." About Warren Resources: Warren Resources, Inc. is
a growing independent energy company engaged in the exploration and
development of domestic natural gas and oil reserves. Warren is
primarily focused on the exploration and development of coalbed
methane properties located in the Rocky Mountain region and its
water flood oil recovery program in the Wilmington Unit located in
the Los Angeles Basin of California. The Company is headquartered
in New York, New York, and its exploration and development
subsidiary, Warren E&P, Inc., is headquartered in Casper,
Wyoming. Forward-Looking Statements: This press release contains
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. Statements regarding projections of revenues or income
or reserves or similar items, such as statements pertaining to
future revenues, future capital expenditures, future cash flows,
future operations or results, and other statements that are not
historical facts, are examples of forward looking statements. These
forward-looking statements reflect our current views with respect
to future events, based on what we believe are reasonable
assumptions. No assurance can be given, however, that these events
will occur. These statements are subject to risks and uncertainties
that could cause actual results to differ materially, including
without limitation risks of declining oil and gas prices,
competition for prospects, accuracy of reserve estimates, estimated
rates of production, increases in drilling and lifting costs,
increases in equipment and supply costs and other factors detailed
in the Company's filings with the Securities and Exchange
Commission (http://www.sec.gov/). DATASOURCE: Warren Resources,
Inc. CONTACT: David Fleming, Warren Resources, Inc.,
+1-212-697-9660 Web site: http://www.warrenresourcesinc.com/
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