Crimson Exploration Inc. has closed on the previously announced acquisition of four producing gas fields and undeveloped acreage in South Texas from Smith Production Inc. ("Smith") for $65 million in cash with an effective date of January 1, 2008. Approximately $4.8 million of that purchase price relates to properties that currently lack certain required landowner consents to assign, and therefore, has temporarily excluded from the closing. Both Crimson and Smith anticipate that the remaining consents will be attained and will close in the near future.
After adjustment for the estimated results of operations of approximately $7.4 million for the period between the effective date and the closing date, and other typical purchase price adjustments, and assuming that the $4.8 million related to the consents will be attained, the final cash consideration was $57.4 million, of which $52.6 million has been paid. The additional $4.8 million in consideration will be paid once the landowner consents are received, which is expected to occur by the end of July.
The Company's internal estimate of proved reserves was announced at 23 Bcfe as of the effective date. Netherland, Sewell, and Associates has finished its preliminary estimates and affirmed the Company's announced proved reserves. Proforma January 1, 2008 for this acquisition, Crimson's proved reserves were 153 Bcfe. Production from the acquired assets is currently averaging approximately 7 mmcfe per day, which will result in a 13% increase in the Company's current net daily production.
The $57.4 million adjusted price, with adjustment of the reserves for approximately one Bcfe of production for the interim operations between the effective date and closing, represents a purchase cost of $2.58 per mcfe for approximately 22 bcfe of proved reserves and $8,200 per mcfe of current average daily production. The Company financed this acquisition with proceeds from borrowings available under its revolving credit facility.
As previously disclosed, the assets being acquired consist of a 25% non-operated working interest in Samano Field located in Starr and Hidalgo counties, a 100% operated working interest in North Bob West Field in Zapata County and 100% operated working interests in Brushy Creek and Hope fields in DeWitt County. Crimson will be acquiring an interest in over 16,000 gross acres with these fields, most of which is held by production. This acquisition will further enhance the Company's growing presence in the South Texas area.
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