Atlas Resource Partners LP (NYSE: ARP) has entered into a definitive agreement to acquire total reserves of 47 million barrels of oil equivalent (MMboe) of oil and natural gas liquids (NGLs), including proved developed producing reserves of 25 MMboe, for $420 million. The acquired position is located in the Rangely field in northwest Colorado, a mature tertiary carbon-dioxide flood with low-decline oil production. The transaction is expected to close in the second quarter of 2014.
The acquired assets are expected to provide ARP with a stable, high-margin cash flow stream with a low-decline profile (average 3-4% annual decline rate over the past 15 years). The asset position is a tertiary oil recovery project using carbon-dioxide flood activity, and the production mix is predominantly oil at 90%, with the remainder coming from NGLs.
ARP will have a 25% non-operating net working interest in the assets, and Chevron Corp. will continue as operator. Material capital expenditures and growth projects are subject to ARP's approval.