Southwestern Energy Co. (NYSE: SWN), through its wholly owned subsidiary Southwestern Energy Production Co., has signed an agreement to purchase 312,000 net acres in northwest Colorado targeting crude oil, natural gas liquids, and natural gas contained in the Niobrara formation from Quicksilver Resources Inc. (NYSE: KWK) and SWEPI LP, a wholly owned subsidiary of Royal Dutch Shell plc (NYSE: RDS.A) for $180 million.
Southwestern intends to use its revolving credit facility to finance the acquisition. The transaction is expected to close in the second quarter of 2014.
"We are very excited about our entry into this emerging liquids-rich resource play," said Steve Mueller, president and CEO of Southwestern Energy. "This acreage position covers a substantial area in the Sand Wash Basin – over 50 miles across and over 20 miles wide – and provides the opportunity for us to leverage our operational strengths into a new large, scalable project. Basin characteristics include proven oil production with minimal water cut, preferred fluid-phase windows, demonstrated overpressure, evidence of matrix permeability and porosity from petrophysics and well decline behavior, a thick, continuous reservoir with ample storage capacity and potential upside from downspacing and stacked reservoir benches. Upon closing, we expect that we could begin drilling operations as early as June of this year."