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Gas industry

Hugoton Energy Corporation Completes Acquisition of Consolidated Oil & Gas Inc.

Strategic Insights

— 1 min read

Hugoton Energy Corporation, a leading independent oil and natural gas company, has completed the acquisition of Consolidated Oil & Gas Inc., a privately owned oil and gas company based in Denver, Colorado. The transaction, which was approved by Hugoton's shareholders at a special meeting in Wichita, Kansas, marks a significant expansion of Hugoton's operations into new basins outside of the Hugoton Producing Area. The acquisition is expected to create significant savings and efficiencies for Hugoton, with the company estimating that the deal adds 130 BCFE of proved reserves for $95 million.

Key Takeaways:

  • Hugoton Energy Corporation has completed its acquisition of Consolidated Oil & Gas Inc. in a deal worth $34.8 million in cash and 9.1 million common shares.
  • The acquisition extends Hugoton's operations into several basins outside of the Hugoton Producing Area, with nearly 90% of the combined reserves located in Kansas, Oklahoma, Texas, and North Dakota.
  • The combined reserves of the two companies totaled 300 BCFE with a 10% present value of $175 million at year-end 1994, including 66% natural gas and 34% crude oil reserves.
  • The reserve-to-production ratio is 11.5 years, indicating a long-term sustainable source of revenue for Hugoton.
  • Hugoton will operate over 80% of the combined properties, allowing the company to maintain control over its assets and operations.
  • The acquisition adds 130 BCFE of proved reserves for $95 million, making it a significant value-enhancing transaction for Hugoton.

Statistics:

  • $34.8 million: cash paid in the acquisition
  • 9.1 million: common shares issued in the acquisition
  • 90%: percentage of combined reserves located in Kansas, Oklahoma, Texas, and North Dakota
  • 300 BCFE: combined reserves of Hugoton and Consolidated Oil & Gas Inc. at year-end 1994
  • $175 million: 10% present value of combined reserves at year-end 1994, calculated in accordance with SEC guidelines
  • 11.5 years: reserve-to-production ratio, indicating a long-term sustainable source of revenue
  • $95 million: estimated value of 130 BCFE of proved reserves added through the acquisition
  • $.73 per MCFE ($4.38 per BOE): price paid for the acquisition, excluding other assets and undeveloped acreage

Sources:

  • Hugoton Energy Corporation press release, dated September 7, 1995
  • Consolidated Oil & Gas Inc. financial statements, year-end 1994
  • SEC guidelines for calculating present value of oil and gas reserves

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