Carbon Natural Gas Company, through its affiliate Carbon Appalachian Company, LLC, completed the acquisition of natural gas producing properties and related facilities located predominantly in the State of West Virginia for approximately $21,500,000, subject to normal and customary pre and post-closing adjustments.
Carbon Appalachian will also fund as part of the acquisition an inventory of field development and enhancement projects and general working capital.
Current daily net production from the acquired assets is approximately 7,500 net daily mcf of gas. The production is 100% gas. As of July 1, 2017, the Company estimates that the properties have 52 BCF of Proved Developed Producing Reserves as determined by the Company’s qualified reserves evaluator using SEC pricing. The acquisition includes approximately 311 miles of natural gas pipelines, gas gathering lines and related compression facilities.
Effective with the closing of the transaction, Carbon increased its current ownership in Carbon Appalachian to 16% from 3%. Carbon also has the ability to earn additional ownership interests of Carbon Appalachian after a return threshold is met. Carbon is the Manager of Carbon Appalachian. The Company’s general and administrative expenses associated with the management of the assets will be reimbursed by Carbon Appalachian.
Carbon Appalachian was formed by Carbon and two institutional investors to acquire producing assets in Southern Appalachia and has an initial equity commitment of $100,000,000. Carbon will utilize the committed funds and its expertise in Southern Appalachia to pursue additional acquisitions in the region.
A description of the financing and acquisition transactions is available on the Company’s Current Report filed August 16, 2017 on Form 8-K.
