Contango pays cash for Wyoming gas assets
US energy company Contango Oil & Gas said July 8 it signed an agreement to acquire all-gas assets in Wyoming from ConocoPhillips.
Contango is to pay $67mn in cash for assets in the Wind River basin of Wyoming, which as of July 1 had a net production rate of around 78mn ft3-equivalent/day.
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“This is a huge, conventional gas field with low decline, purchased at an attractive valuation,” Contago’s CEO Wilkie Colyer said.
Wyoming is a relatively small gas producer compared with other states. The number of active wells producing natural gas as of 2019, the last full year for which the federal government has data, accounted for about 4% of the national total.
Estimates from the US Geological Survey put the total estimated undiscovered, technically recoverable reserves at 2.6 trillion ft3 of natural gas and 288mn barrels of oil in Wyoming.
Contango said it expected that the Wyoming reserves will have a decline rate of about 5% annually over the next five years.
New drilling could be complicated by a moratorium on drilling on federal lands imposed by US president Joe Biden. But a district court judge ruled recently that states had proved they would suffer financially from the pause, prompting the government to review its position.
Alabama, Alaska, Arkansas, Georgia, Louisiana, Mississippi, Montana, Nebraska, Oklahoma, Texas, Utah and West Virginia challenged the federal moratorium. Wyoming has its own legal challenge against the pause.
Contango said it expects to close on the Conoco deal by the third quarter.