Admiral Bay Resources Snaps Up Producing Cherokee Basin Assets

Cherokee Basin - Shiloh
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Admiral Bay Resources has acquired additional producing natural gas assets in the Kansas Cherokee Basin from an undisclosed private seller for approximately $2.0 million (US). Based on available data and Admiral Bay analysis, the assets currently have gross sales of approximately 1.2 million cubic feet of gas per day (mmcf/d) and contain proved reserves of approximately 8.3 billion cubic feet of natural gas. Located in Wilson and Neosho counties, the Thayer (Neodesha) assets are centrally located among existing Admiral Bay operations.

Admiral Bay paid approximately $0.25 per proved thousand cubic feet (mcf) of natural gas reserves and approximately $1,900 per daily producing mcf. In addition to existing production, Admiral Bay believes there are opportunities to enhance existing production through low-cost workovers and improvements to the gathering system and field compression, providing an opportunity to return production to 1.6-1.8 mmcf/d, levels realized prior to the ownership of the assets which results from its foreclosure on the field from the previous operator in 2008. The company has also identified approximately 70 additional in-fill drilling locations. Admiral Bay believes additional natural gas producing coals and shales may be accessible from existing wellbores to enhance current production with only modest expense.

This acquisition should immediately increase Admiral Bay's current base production by approximately 35% and proved reserves by nearly 20%, with additional production enhancement possible through existing well remediation and new development drilling.

"This acquisition is transformational for Admiral Bay as it adds meaningful scale to both production and reserves in the Cherokee Basin," Steve Tedesco, President and Chief Executive Officer of Admiral Bay noted. "Moreover, our ability to complete and fund this acquisition with both new equity and debt demonstrates the confidence our equity investors and lenders have in the future of Admiral Bay."

Tedesco continued, "The Thayer properties provide strong current production, a solid base of proved natural gas reserves and plenty of running room for growth at a compelling price. We consider this to be not only a reaffirmation of our commitment to the Cherokee Basin but the beginning of a period of significant growth for the company."

FIG Partners, LLC Energy Research and Capital Group served as Admiral Bay's financial advisor in the transaction.



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