Storm Cat Energy Acquires CBM Properties in Wyoming

Powder River Basin
(Click to Enlarge)
Storm Cat Energy has entered into a definitive Purchase and Sale Agreement with Palo Petroleum, Inc. of Dallas, Texas to purchase all of Palo's right, title and interest in Palo's NE Spotted Horse Field, located on the eastern portion of the Powder River Basin, approximately 35 miles northwest of Gillette, Wyoming, for a cash purchase price of US $8,550,000.

The NE Spotted Horse Field consists of 71 producing wells (69 operated) currently producing approximately 2.6 mmcfd from various Fort Union coal seams. There are 6,320 gross contiguous acres of which over 80% is either undeveloped or partially developed. Net Proven reserves are estimated at 4.7 bcf with an additional 1.6 bcf of probable reserves.

The acquisition includes Palo's gas gathering subsidiary, Paso Gaso Pipeline, LLC, which provides gathering and compression services to the field. The effective date of the transaction is January 1, 2005, with closing on or before February 28, 2005. In a separate transaction, Storm Cat Energy (USA) has entered into a non-binding Letter of Intent to sell the assets of Paso Gaso to an unaffiliated third party for US $950,000, contingent on closing the Palo Petroleum acquisition.

Company President, Scott Zimmerman said: "This important acquisition is consistent with our growth plan of acquiring producing assets with significant development drilling opportunities in a renowned coalbed natural gas region of the United States. Here, we can apply our technical expertise in multi-seam completions which significantly reduces finding and development costs. The NE Spotted Horse Field is also located in the close proximity to our recently acquired N.Jamison/Twenty- Mile field which will provide operational synergy."

Storm Cat will finance this acquisition through a combination of debt and/or equity. The equity financing will consist, subject to TSX Venture Exchange approval, of a non-brokered private placement of up to 3.2 million Units at a price of CDN $3.90 per Unit. Each Unit will consist of one common share and one common share purchase warrant (a "Warrant"). Each Warrant will entitle the holder to purchase an additional common share of the Company for a period of two years at an exercise price of CDN $5.20. A finder's fee of up to 7% percent of the gross proceeds is payable in cash or, subject to the acceptance of the TSX Venture Exchange, in stock. Storm Cat Energy (USA) has already paid a 10% non-refundable deposit (US $855,000) to Palo against the total purchase price. At present, no debt financing is in place and the terms of any debt financing remain to be settled with potential creditors.

The Company expects to apply any financing raised, beyond that required to complete the Palo acquisition, to carry out new exploration drilling on the NE Spotted Horse Field and its N.Jamison/Twenty-Mile Field, and for future property acquisitions and general working capital.

Our Privacy Pledge

Most Popular Articles

From the Career Center
Jobs that may interest you
United States Houston: Account Rep, Bus Dev, Sr
Expertise: Business Development|Sales
Location: Houston, TX
Business Development Manager
Expertise: Business Development|Construction Manager|Sales
Location: Tempe, AZ
SXL- Manager, Business Development
Expertise: Business Development
Location: Newtown Square, PA
search for more jobs

Brent Crude Oil : $50.47/BBL 0.98%
Light Crude Oil : $49.72/BBL 1.09%
Natural Gas : $2.76/MMBtu 1.09%
Updated in last 24 hours