Shoreline Energy Corp. announced the acquisition of two non-operated working interest asset packages located in Weld County Colorado in the Wattenberg field. The asset packages are in the heart of the world class Niobrara and Codell oil projects, being developed with the use of proven horizontal wells and multiple stage hydraulic fracturing technology. These latest acquisitions are situated in close proximity and are a perfect complement to the royalty and working interest acquisitions the Company announced in the fourth quarter of 2012. Total aggregate purchase price for these acquisitions is $22.5 million, subject to final closing adjustments, with effective dates of Nov. 1, 2012 and Feb. 1 respectively.
These new acquisitions bring to Shoreline an average pre-pooled working interest of 14 percent in approximately 4,500 acres of land. Drilling operations are underway on the acreage and to date 8 new horizontal oil wells are on production. Based on current development plans published by the key operators in the area, there are between 100 and 200 possible horizontal drilling locations on the acquired acreage. Current operating income from the existing vertical oil and gas wells on the lands is approximately $250,000 per month, plus a forecast initial $200,000 to $250,000 per month attributable to the initial 8 recently drilled horizontal producers on Company lands. The Company has engaged the services of a well-respected reserve evaluator to provide an NI 51-101 compliant independent evaluation of the assets to be completed in the second quarter of 2013.
"The closing of these latest acquisitions is a very significant event for Shoreline, further expanding our holdings in what we believe is a world class and highly profitable project. These assets are an excellent fit with our existing assets. Drilling activity has already commenced and the Company has an extensive inventory of drilling locations which could substantially increase cash flow in both the short and longer term," stated Shoreline's Chief Executive Officer Trevor Folk. "Our total acreage in the Wattenberg Field now spans 31,500 gross acres and includes a combination of passive royalty income generating properties and high impact growth oriented working interest properties. We believe these assets will provide a very attractive return on investment to our shareholders."
The acquisition price comprises $19.2 million of cash plus 600,000 common shares of Shoreline at a price of $3.65 per common share. Shoreline will finance the acquisition with a combination of cash-on-hand, short-term debt and bank debt.
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