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|Warren Resources Completes Purchase of North Wilmington Unit|
NEW YORK--(BUSINESS WIRE)--Jan. 3, 2006--Warren Resources, Inc. (NASDAQ:WRES), an oil and gas exploration and development company, today announced that effective December 31, 2005, it completed the purchase of a 100% working interest (subject to pre-existing unaffiliated royalty burdens of 15.4%) in the North Wilmington Unit (NWU) oil field in the Los Angeles Basin in California for $23 million in cash. The Company estimates that the NWU contains proved oil reserves of approximately 23.4 million barrels gross, 19.8 million net. The NWU currently produces approximately 400 gross barrels of oil per day from 46 active wells and it is adjacent to the Company's operated Wilmington Townlot Unit (WTU) in the Wilmington oil field. The acquisition of the NWU includes 11.87 acres of fee surface properties, a central procession facility, oil field equipment and all lease, contract and related rights.
The Company estimates that the NWU has 1.7 million barrels of net proved developed producing oil reserves (PDP), and 18.1 million barrels of net proved undeveloped oil reserves (PUD) providing for future infill drilling and secondary recovery water flood opportunities. The NWU contains 73 inactive wells, many of which the Company believes may be returned to production through workovers and other remedial activities. The Company was appointed the operator of the NWU and has budgeted $10 million in 2006 for facilities upgrades, remedial work on 18 idle wells and drilling four new wells in the NWU.
Norman F. Swanton, Chairman & CEO, commented for Warren Resources, "2006 should be a year of significant production growth for the Company. Our large-scale drilling projects in the Wilmington Townlot Unit and the North Wilmington Unit in California could provide triple digit production growth for us in 2006. Additionally, upon completion of the current environmental impact statement in 2006 for the Atlantic Rim coalbed methane project in the Washakie Basin in southwest Wyoming, we will have the flexibility to accelerate the pace of development drilling of potentially high quality CBM wells with our Atlantic Rim joint venture partner, Anadarko Petroleum. We look forward to capitalizing on the Company's large acreage position and extensive drilling opportunities in both of these areas."
About Warren Resources
Warren Resources, Inc. is a growing independent energy company engaged in the exploration and development of domestic natural gas and oil reserves. Warren is primarily focused on the exploration and development of coalbed methane properties located in the Washakie Basin in the Rocky Mountain region of Wyoming and its water flood oil recovery programs in the Wilmington Townlot Unit and North Wilmington Unit located in the Los Angeles Basin of California. The Company is headquartered in New York, New York, and its exploration and development subsidiary, Warren E&P, Inc., is based in Casper, Wyoming and Long Beach, California.
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements reflect our current views with respect to future events, based on what we believe are reasonable assumptions. No assurance can be given, however, that these events will occur. These statements are subject to risks and uncertainties that could cause actual results to differ materially, including without limitation risks of declining oil and gas prices, competition for prospects, accuracy of reserve estimates, estimated rates of production, increases in drilling and lifting costs, increases in equipment and supply costs and other factors detailed in the Company's filings with the Securities and Exchange Commission (www.sec.gov).
CONTACT: Integrated Corporate Relations Investor Relations: Kathleen Heaney, 212-753-2137 SOURCE: Warren Resources, Inc.