BNK Petroleum Inc. announced that its indirect wholly owned subsidiary BNK Petroleum Inc. (BNK US) has entered into a Purchase and Sale Agreement with XTO Energy Inc., a subsidiary of Exxon Mobil Corporation, for the sale by BNK US of its Tishomingo Field, Oklahoma assets other than the Caney and upper Sycamore formations, for $147.5 million, subject to customary closing adjustments.
Subject to completion of customary conditions, the transaction is expected to close in late April. If the transaction is completed, the proceeds of the sale are expected to be used to accelerate the drilling of Caney wells in the Tishomingo field, the Company's ongoing exploration efforts in Europe and for repayment of the Company's credit facility.
Wolf Regener BNK's President and CEO, stated: "We are very pleased to announce this transaction, which is the culmination of the Company's efforts to maximize the value of our Woodford shale gas assets. The transaction is also structured to preserve our rights in the relatively undeveloped Caney and Upper Sycamore formations in the Tishomingo Field. We believe these intervals represent a promising opportunity to develop new oil reserves and production, in an area in which we have a successful operating history. If completed, this transaction will provide the Company with sufficient funds to accelerate our planned Caney development and flexibility to pursue our exciting European projects on our own or with partners."
Macquarie Capital Markets Canada Ltd. is the lead financial advisor to the Company in connection with this transaction, and has delivered an opinion to the Company's board of directors that, as of the date hereof and based upon and subject to the assumptions, limitations and qualifications set forth in the opinion, the consideration to be received by the Company pursuant to the transaction is fair, from a financial point of view, to the Company.
Update on Caney Development
A drilling rig is currently mobilizing to the next planned Caney well, the Barnes 6-3H well. Once it is rigged up, drilling is expected to begin immediately. The drilling rig has been contracted for two wells with the option for two additional wells.
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