Ursa, backed by private equity firm Denham Capital, holds over 40,000 net mineral acres under lease in Burleson, Bastrop, and Lee counties, TX. Comstock will acquire 70% of Ursa’s interests in certain oil and gas properties in Burleson and Washington Counties, Texas for $66.5 million.
The properties being acquired include one well producing 433 barrels of oil equivalent per day (boed) (227 boed, net to the interests being acquired) and approximately 32,000 gross acres (20,000 net) that are prospective for oil in the East Texas Eagle Ford shale formation.
Comstock expects to complete the acquisition during this quarter, which is subject to customary closing conditions contained in the purchase agreement. Comstock anticipates moving one of its operated rigs to these properties in early 2014 and estimates that it will drill ten operated wells on this acreage in 2014.
"This acquisition will allow us to extend our successful South Texas Eagle Ford shale program into East Texas," stated M. Jay Allison, CEO of Comstock. "The East Texas Eagle Ford acquisition combined with the acreage the company is acquiring in the Tuscaloosa Marine Shale play will complement our successful oil drilling program in South Texas by adding multiple years of additional oil drilling inventory for Comstock."
The deal, valued by Global Hunter Securities analysts at roughly $2,700/net acre based on $50K/net flowing boe of production, “rounds out CRK’s $120MM new venture leasehold program,” the analysts noted in a report Thursday morning.
In a November 2013 corporate presentation, Comstock pointed to a $120 million budget for acreage acquisitions in oil plays as part of its effort to boost its 2013 production to comprise 20% oil. The company expects its Eagle Ford shale program to be the largest contributor to oil production growth in 2013 and 2014 with a plan to drill 76 (49.6) wells in the oil window of the play.
The properties are near successful Eagle Ford shale wells drilled by other industry participants, said Comstock. Notably, Clayton Williams holds 100,000 net acres prospective for the Eagle Ford centered in Burleson where the company’s Pivonka IP’d at 1266 boepd (95% oil) and the Viola Davis IP’d at 634 boepd (94% oil), said Global Hunter Securities analysts.