The Company has acquired, from Edward Mike Davis LLC and Edward Mike Davis, operations and a 90% working interest in the producing Christianson Field and two other fields. The acquisition includes approximately 100,000 acres of prospect leases in Washington County, Colorado, and approximately 20,000 acres of prospect leases in Laramie County, Wyoming. The fields are currently producing approximately 500 barrels of oil per day net to Delta.
The consideration paid by Delta totaled $8 million and 1,000,000 shares of the Company's common stock. Closing occurred on September 19, 2003, at which time Delta paid $2 million in cash and executed a short-term promissory note for $6 million that is due and payable on October 3, 2003. Delta is in the process of increasing its credit facility with its banks to provide the necessary funds to pay the promissory note on or before its maturity date.
"We intend to pursue an active drilling program on the prospect acreage based on information derived from an extensive 3-D seismic evaluation," stated Roger A. Parker, President and Chief Executive Officer of Delta Petroleum Corporation. Davis has retained reversionary interests in the properties after agreed production totals have been achieved. Under certain circumstances specified in the purchase agreement, Delta will be obligated to issue additional shares of its common stock to Davis if any individual prospect produces in excess of one million barrels of oil equivalent.
"Although we will continue to pursue attractive acquisitions, management believes that shareholder value can be substantially enhanced through drilling activities, particularly in areas such as these, which exhibit the potential for significant reserve recoveries at low finding costs. Current plans call for Delta to be significantly more active in drilling operations during Fiscal 2004 than in prior years."
Most Popular Articles