Energen Corp. Will Acquire Properties In The Permian Basins Wolfberry Play In Texas

DOW JONES NEWSWIRES 2/15/2012

Energen Corp. (EGN) said it will acquire properties in the Permian Basin's Wolfberry play in Texas from a private seller for $65.8 million, while it plans to cut its investment in natural-gas production this year due to low prices.

Energen said the deal is expected to close by the end of the month and will add about 3,200 net acres to its Wolfberry position in the oil- and liquids-rich Permian Basin. The company said it doesn't plan to begin developing the properties before 2013.

Meanwhile, Energen said it will cut approximately $45 million from its planned capital investment in the San Juan Basin, which straddles several southwestern states and is where most of the company's natural gas originates. The company expects to have completed drilling its highest-return wells in the basin by mid-year and will cease all drilling activities there after June 30.

The company's capital investment plans for 2012 now reflect approximately $890 million for drilling and development, with the bulk of the funds targeting the Permian Basin. Approximately $415 million will be invested in the company's Wolfberry play.

Energen, which produces oil and gas and operates a natural-gas utility in Alabama, has been expanding its production recently after it bought new assets in the Permian Basin in Texas.

Last month, Energen reported its fourth-quarter earnings fell 82% as mark-to-market losses on financial commodity contracts weighed on bottom-line results.

Shares closed at $49.41 Friday and were unchanged after hours. The stock is down 15% in the past 12 months.

-By Nathalie Tadena, Dow Jones Newswires; 212-416-3287; nathalie.tadena@dowjones.com