Venoco Buys Natural Gas Wells in California

San Francisco Business Times

Venoco (NYSE: VQ) owns interests in about 111 wells in the Sacramento natural gas basin. It also owns offshore and onshore oil rigs and wells in Southern California and Texas.

Venoco's local holdings include the Sacramento Delta Fields in Solano County, bought from Chevron in 1998, fields in Contra Costa County, and fields in Sacramento and in San Joaquin County, according to the company's Web site.

Aspen (OTCBB: ASPN) operated 55 natural gas wells in California's Sacramento Valley and owns interests in another 20 wells. The company also has oil and gas interests in Montana, which are not part of the deal.

A group of people and businesses who own working interests in the wells, including three Aspen directors and a broker that helped arrange the deal with Venoco, will have the opportunity to sell their interests, according to a statement from Aspen. The total purchase price could reach $25 million if they all participate.

The deal requires approval of Aspen shareholders at a meeting the company plans to hold in April or later.

Venoco said in a statement Friday that its proven oil and natural gas reserves at the end of last year were equivalent of 97.5 million barrels of oil, worth about $616.7 million at the end of the year. The value is an estimate of future revenue before income taxes, discounted 10 percent, which is a standard measurement of asset value in the oil and gas industry.

Venoco’s oil and natural gas production was the equivalent of 7.9 million barrels last year, or 21,674 barrels per day. That was an 11 percent increase from 2007. The company expects to produce the equivalent of 19,000 barrels of oil per day this year.

Production from the Sacramento region climbed in the fourth quarter, but the company plans to run three drilling rigs in the basin this year, down from five last year.

Venoco plans to spend about $74 million on developing wells and other capital expenditures in the Sacramento basin this year.