EnerJex has exercised its option to acquire a 90% working interest in certain oil producing properties located adjacent to the Company's existing Black Oaks Project, which produces oil from the Mississippian formation.
Pursuant to the terms of this agreement, EnerJex has acquired a 90% working interest in 720 acres and may acquire a 90% working interest in 1,280 additional adjacent acres upon fulfilling certain drilling milestones. In total, this additional acreage nearly doubles EnerJex's exposure to its Mississippian oil play in Kansas to 4,100 acres.
Based on EnerJex's December 31, 2010 third-party reserve report (updated to reflect NYMEX strip pricing on 6/13/2011), the Company's existing Black Oaks Project holds 1.4 million net barrels of proved oil reserves which are expected to generate future pre-tax net cash flow of $89 million with a PV10 value of $29 million (a description of the term "PV10 value" is provided in the forward-looking statements below). EnerJex's management believes that this additional acreage will yield a proportionate amount of recoverable oil with economic results that are similar to those of the Black Oaks Project.
EnerJex's CEO, Robert Watson, Jr., commented, "I am pleased to announce this transaction and look forward to accelerating the development of our Mississippian oil play in the near future. Production from our 2011 drilling activities has been exceeding the Company's expectations across the board, and EnerJex continues to pursue additional strategic initiatives aimed at growing the company's asset base and value while reducing costs. I expect the Company to show further tangible progress on these fronts in the coming weeks."
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