Petro Resources Looks to Acquire Stake in Williston Basin Fields
Petro Resources Corporation said that it has entered into a letter of intent with an undisclosed private company (the "Seller") for the acquisition of an interest in 15 fields located in the Williston Basin in North Dakota. The properties consist of approximately 15,000 acres and 150 wells that are currently producing approximately 520 barrels of oil per day net to the Seller's interest. The company will acquire fifty percent (50%) of the interest currently owned by the Seller in the wells and acreage. The parties intend for transaction to close, assuming satisfaction of certain conditions, on or before December 31, 2006.
The fields are secondary recovery water flood re-pressurization candidates and the parties plan to conduct re-pressurization and subsequent horizontal drilling operations to increase the production rates. Based on analog data and engineering studies, this acquisition could add as much as 9 million barrels of oil reserves net to the company. The Seller is currently, and will remain, the operator of the properties.
As consideration for the interest, the company will pay the Seller in cash and common stock. In addition, the company will be required to contribute development capital towards 100% of the mutually agreed upon joint capital costs of the existing secondary recovery and development program and in other joint participations three year period. For a period of thirty-six months from the closing, the Seller will guarantee that the Company's share of gross production revenue from the property shall be not less than the financial equivalent of 300 net barrels of oil per day.
The consummation of the transaction is subject to certain closing conditions, including the negotiation and execution of mutually agreeable definitive agreements, the company's independent confirmation of reserves, production and operating expenses associated with the property and the company's acquisition of $60 million of financing. The company is in discussions with certain financing sources for the provision of $60 million of financing; however, as of the date of this release there are no agreements or understandings on the part of anyone to provide the required financing to the company.
Petro Resources Corporation is an independent exploration and production company focused on domestic lease acquisitions, exploration, and oil and gas production.
- Petro Resources Changes Name to Magnum Hunter Resources Corp. (Jul 14)
- Petro Resources Underscores Changes to Management (May 27)
- Petro Resources Happy with First 4 Wells at Surprise Prospect (Mar 02)