$95,000 ish per flowing barrel.............I'll take that any day!
Simply put, LRE has lots of drilling locations, and (was) pretty well fully extended on its credit lines (something like 400 million on 450 limit if I remember correctly). That means they (were) restricted on their ability to drill their available prospects to cash generated from cash flow.
This transaction cuts their debt almost in half...........which inturn gives them greater financial flexibilty, and reduced financial risk.
Its interesting they have a 2013 budget of 260-270 million, as that is probably not much over their 2013 cash flow. This may mean they have other plans for that additional financial flexibility..........could it be a high dividend strategy, or prehaps they intend to buy something big!
As far as hedging 50/50, thats a very wise strategy...........it allows the company to capture the bonus of increased oil/gas prices (if that happens over the next 12 month, while also essentally removing corporate financial risk should prices decline). A year from now, they get to reassess their hedging needs.
This company has an all star management team, and we're seeing a well though out strategy unfolding.