Walter Energy says that its Walter Natural Gas, LLC subsidiary has completed its acquisition of the Alabama natural gas assets of HighMount Exploration & Production LLC, for approximately $210 million in cash.

"We see this as a strategic acquisition related to growing our premium coking coal operation," said Walter Energy Interim Chief Executive Officer Joe Leonard. "While this acquisition more than doubles our annual coal bed methane production and is expected to be a stable generator of earnings and cash flows into the future, it is more important to us because it helps ensure that future coal production areas will be properly degasified, thereby improving the safety and operational efficiency of our existing and future underground coking coal production."

As previously announced, the acquisition includes approximately 1,300 existing conventional gas wells, pipeline infrastructure and related equipment located adjacent to the Company's existing underground mining and coal bed methane business located in Tuscaloosa County, Ala. Current proven reserves are approximately 190 bcf (billion cubic feet), with current annual coal bed methane production of 8.5 bcf. The purchase price equates to approximately $1.10 per mcf of proven reserves, and the acquisition is expected to be accretive to Walter Energy's 2010 earnings. All 47 of HighMount's Alabama active employees accepted offers to remain with the Company following the sale. Raymond James & Associates, Inc. acted as the transaction advisor to Walter Energy.

Tags: Walter Energy