The new wells acquired presently average approximately 20-25 gross barrels of oil equivalent per day (BOE/d). The company believes that with recompletion work it can increase the daily production of these four wells to a range of 75-100 BOE/d through operations such as down-hole pump changes and increasing artificial lift system capacity. Daily production will continue while these recompletion plans are finalized and implemented. In addition, the newly acquired acreage offers potential offset drilling locations in the prolific La Point area of the Uintah Basin. Both the current production from the wells and the undeveloped reserves in the surrounding leases will be included in an analysis of the company's oil and gas reserves being conducted by the independent engineering firm Ryder Scott.
Under terms of the acquisition, Creston paid $250,000 in cash and issued 500,000 shares of restricted common stock, in turn receiving a 100% working interest in the wells and the surrounding leases. The cash portion of the purchase price may be subject to post-closing adjustment based on a final apportionment of the benefits and obligations associated with the acquired assets as of the closing date. The company did not assume any indebtedness as part of the transaction. Homeland Gas & Oil, a wholly owned subsidiary of the company, will take over as operator of the acquired wells.
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