Petroflow to Pick Up Additional Acreage in Hunton Resource Play
Petroflow has entered into a Letter Of Intent with a third party to acquire additional producing oil and gas assets in Oklahoma ("the New Property"). The Company has completed an internal valuation of the New Property using recent forecast pricing at a ten percent discounted present value of approximately US $46 million. Substantially all of the value is attributable to proved developed producing reserves. Current production net to the vendor's working interest is approximately 2000 Boe's per day.
The agreed upon purchase price is US $40 million, which, at the option of the vendor, may be paid entirely in cash or by a combination of US $22 million in cash and 5 million treasury shares.
"We are excited to have the opportunity to significantly increase our production at a time when commodity prices are at a low point in the business cycle. As the commodity prices improve, the New Property will prove to be an even more valuable acquisition," stated Company CEO, John Melton.
"This transaction is accretive to our cash flow per share and should significantly improve our bank loan ratios," added Company CFO, Duncan Moodie.
The New Property is located in the Company's core Hunton Resource Play. The purchase of the New Property is subject to finalization of a mutually acceptable purchase and sale agreement, due diligence on the part of Petroflow and other standard qualifications. The Company's working interest partner has rights under the Farm-out Agreement to acquire the New Property. These rights expire on March 5, 2009. The transaction is expected to close on or before March 31, 2009.