BG Group Can Get in on EXCO's Aquisition

BG Group will have the opportunity to participate in 50% of EXCO Resources’ $459.4 million acquisition of Chief Oil & Gas' Marcellus assets

Eric Chenoweth, CFA 23 December, 2010 | 6:03PM
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On Tuesday, EXCO Resources (XCO) announced it was acquiring Chief Oil & Gas' Marcellus Shale assets for $459.4 million. The properties fall within the BG Group (BG.) area of mutual interest, so BG will have the opportunity to participate in 50% of the acquisition. The Chief assets fit well with EXCO's existing Marcellus Shale position in northeast Pennsylvania. Also, the deal comes as little surprise, given EXCO's improved balance she

et and ample liquidity to bolt-on acquisitions within its two emerging core assets in the Marcellus and Haynesville shales. If we ignore value for the 15 producing wells and 11 drilled uncompleted wells, the deal prices at roughly $9,188 per net acre. Assigning $100 million to the producing and drilled uncompleted wells (which we view as a reasonable estimate), the deal prices at roughly $7,188 per net acre.

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Eric Chenoweth, CFA  Eric Chenoweth, CFA, is an associate director of stock analysis with Morningstar.

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