ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On November 16, 1999, PrimeEnergy Corporation, the Registrant
("PrimeEnergy"), through its subsidiary PrimeEnergy Management Corporation,
completed the purchase of certain oil and gas properties and related assets from
Southern Pacific Petroleum U.S.A. ("Southern Pacific"). Such acquisition was
made pursuant to that certain Purchase and Sale Agreement dated as of November
16, 1999, between PrimeEnergy Management Corporation and Southern Pacific, (the
"Agreement"), a copy of which is filed herewith as Exhibit 10.21.
PrimeEnergy paid $1,813,000 for the properties and assets purchased,
subject to, among other adjustments, oil and gas production from the properties
purchased from an effective date of October 1, 1999. The properties and assets
purchased include various producing oil and gas interests in about 131 oil and
gas wells located in Oklahoma and related operating assets and properties, which
are described in the Agreement. PrimeEnergy held various interests in most of
the wells purchased and is currently the operator of the majority of these
wells, and will not assume operation of any wells as a result of this purchase.
The consideration and terms for the acquisition of the interests and
assets purchased were reached by arms's length negotiations between PrimeEnergy
and Southern Pacific and were based upon an evaluation of the properties,
operational costs, analysis of future oil and gas production, development
obligations with respect to the properties and similar relevant factors. There
was, and is, no material relationship between Southern Pacific and PrimeEnergy
or any affiliate of PrimeEnergy, or any Director or officer of PrimeEnergy or
any associate of any such Director or officer.
The funds used by PrimeEnergy for this acquisition were provided under
the existing Credit Agreement between PrimeEnergy and Bank One, Texas.