North American Energy Resources announced that it has agreed to purchase a number of onshore and offshore oil and gas fields from a private seller for $175 Million in cash, subject to certain purchase price adjustments at closing.
The assets include about 108 producing wells in 34 fields with average net production of 12 million cubic feet per day (MMcf/d) of natural gas and 900 barrels per day of oil (BBl/d), or a total of 2,900 BOE/d. The assets have Proven Reserves of approximately 14.5 Million BOE (as calculated by a third party reservoir engineering firm) with additional internally identified Probable and Possible potential of over 5 Million BOE.
With only 30% of these reserves currently producing, substantial potential exists to dramatically increase production volumes. The effective date of the purchase is June 1, 2011, and the purchase, if completed, is scheduled to close on or before December 31, 2011.
Clinton W. Coldren, Chairman and CEO, commented, "We have been evaluating a number of acquisition opportunities. Our initial focus has primarily been on Gulf Coast properties with existing production, upside drilling, and redevelopment potential. This acquisition meets all of our criteria and is a great first step in the execution of our growth plans. Our technical team is optimistic about exploiting the significant remaining potential associated with the properties we are purchasing, as well as, identifying new higher impact exploration opportunities." Alan G. Massara, President and CFO, said, "We are committed to building shareholder value, and this is clearly a transformational purchase for North American. While we work to optimize the profitability of this acquisition, we will continue to seek complementary properties in the Gulf Coast and other productive basins."
Completion of the purchase is subject to preferential rights-to-purchase held by other working interest owners in a number of the properties, as well as, several industry-standard closing conditions, including, without limitation, the completion by North American of satisfactory due diligence and the receipt of all necessary regulatory approvals.
Additionally, North American's ability to close the purchase is contingent on its ability to raise sufficient capital, and the failure to do so could result in termination of the purchase and sale agreement between North American and the private seller. There is no deposit, break-up or other termination fee payable under the purchase and sale agreement. North American intends to utilize a combination of debt and equity to fund the purchase. Interim financing for due diligence expenses and operations is being funded pursuant to a $500,000 bridge loan provided by Clinton W. Coldren. The loan is convertible into shares of common stock and has a term of one year.
Most Popular Articles
From the Career Center
Jobs that may interest you