Goodrich to Divest South Louisiana Assets, Focus on Cotton Valley
Goodrich Petroleum Corporation said Tuesday that it has entered into a definitive agreement with a private purchaser to sell substantially all of its assets in South Louisiana for approximately $100 million, with an effective date of July 1, 2006, and subject to normal and customary conditions and purchaser due diligence. The purchase price will be adjusted for cash flow to the closing date, which is expected to occur on or before February 28, 2007. Upon closing, the sale will allow the Company to focus 100% of its efforts on the development of its Cotton Valley trend acreage, as well as reduce operating costs going forward.
As of the effective date, the Company is selling approximately 41 net Bcfe of proved reserves (44% proved developed producing) based on an internal mid year reserve report. The properties produced at an average rate of approximately 13,000 Mcfe per day net to the Company for the month of December. Using these factors, the Company achieved a sales price of approximately $2.44 per Mcfe of proved reserves or approximately $7,700 per flowing Mcfe.
Commenting on the sale, Gil Goodrich, Vice Chairman and CEO said, "We are very pleased to announce this transaction, which will allow us to complete our strategic shift into the Cotton Valley trend, which has been our primary focus for the last three years and provides the Company with significant growth potential. When combined with our capital raising activities in the fourth quarter of 2006, we are now extremely well positioned to fund our 2007 capital expenditure budget of $275 million, as well as maintain a conservative debt to capitalization ratio."
Goldman Sachs acted as advisor to the Company on the transaction.
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