Rocksource announced that its US subsidiaries have sold the U.S. onshore producing fields to a Texas-based oil and gas company. The transaction also terminates potential arbitration proceedings from the former owners of the US subsidiary Sandhawk Energy LLC, as described in Rocksource's Annual Report for 2010.
The US onshore assets, which in Rocksource's 1Q 2011 financial report were recorded as "assets classified as held for sale" in the consolidated statements of financial position, consist of gas producing fields in San Jacinto and Polk Counties, Texas and are owned through Rocksource's subsidiaries Rocksource Energy Corporation (REC) and Sandhawk Energy LLC (SHK). The fields are on a natural decline and have earlier been classified as non-core by Rocksource. The sale of these assets is in line with the Company's strategy to focus on drilling high potential, EM positive, exploration wells.
The US onshore assets were important in the build-up phase of Rocksource, providing cash flow to assist the Company growing its core business. Due to declining production coupled with a significant drop in US gas prices, the US assets have become increasingly marginal to Rocksource. The net proceeds from the sale are approximately USD 3.5 million and the sale will only have a marginal effect in the profit and loss statement.
Rocksource has a NOK 200 million bond maturing in May 2012 which has security in the U.S. onshore and other assets. The net proceeds from the sale will be used to make a partial early redemption of the bond.
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