This acquisition will include nearly 94% of the working interest in the wells and leases and over 72% of the net revenue interest.
The acquisition is effective for all production generated by the wells since July 1, 2007. The purchase price of $3.6 million cash plus over $250,000 of closing costs included a $3.25 million conventional loan from by Sheridan Asset Management, LLC of White Plains, New York and over $600,000 cash from UPDA.
As previously reported, consistent with UPDA's plan to streamline all E & P operations into Heartland Oil and Gas, these wells, together with UPDA's Catlin Oil and Gas Field in Jack County, Texas, will be transferred to Heartland. Heartland will assume UPDA's obligations on its loan from Sheridan Asset Management, LLC. as consideration for this transfer which will in turn substantially increase Heartland's proven reserves and immediately provide over 2000 mcf/day of natural gas production. In addition to this transfer, Heartland Oil and Gas Corp's wholly owned subsidiary, Heartland Oil and Gas, Inc., will have become authorized to do business in Texas and will be assuming control of well operations from UPDA Operators, Inc., thus completing the transfer of all UPDA exploration and production activities to Heartland.
"The revenue from July's production will be paid at the end of this month, effectively reducing the purchase price of the Palo Pinto wells by nearly $200,000 based on June's figures," reports Heartland CEO, Steven A. Fall. "And that was before we nearly doubled production when the Barron well was completed in the Barnett Shale. At least five more of those wells could show the same production when they are completed in the Barnett. This is a great opportunity for Heartland to expand into Texas, develop a solid base of conventional reserves and generate significant revenues in support of our aggressive coalbed methane programs in Kansas."
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