Goodrich Sells Interest in Burrwood/West Delta 83
Goodrich Petroleum Corporation has completed the sale, effective January 1, 2002, of a thirty percent interest in its Burrwood and West Delta 83 fields in Plaquemines Parish, Louisiana, for $12 million. In conjunction with the sale, the Company has established a $7.7 million line of credit. The $7.7 million line of credit, which will reduce to $5 million on January 1, 2003, is subordinated to the Company's senior facility and can be used for acquisitions, drilling, development and general corporate purposes until December 31, 2004. The acquisition of the interest and the establishment of the line of credit were made by Malloy Energy Company, L.L.C. which is an oil and gas investment company led by Patrick E. Malloy, III., and participated in by Sheldon Appel, both members of the Company's Board of Directors. The Company estimates that the sale will result in a gain recognized in the first quarter of 2002 of approximately $2.1 million.
The Company has initially used the proceeds of the sale to reduce the outstanding amount under its senior credit facility to approximately $11.5 million, which reduces the Company's debt to capitalization to approximately twelve percent. The Company currently has capital available under its senior facility and subordinated line of credit of approximately $17 million. The Company intends to use a portion of the available capital, in addition to projected cash flow from operations, to accelerate its drilling and development activities during 2002.
The Company has established a drilling and development capital expenditure budget for 2002 of $15 million. The budget does not include any strategic acquisitions which may be completed in 2002. However, in addition to the budgeted drilling activities, the Company is continuing to evaluate strategic acquisition opportunities. The capital available under the senior facility and subordinated line of credit will allow the Company to move quickly on potential acquisitions.
Commenting on the transaction, the Company's Chief Operating Officer Robert Turnham stated, "We are very pleased to have been able to consummate the sale of the interest in the Burrwood and West Delta 83 fields and establish the line of credit. The sale of a thirty percent interest in the fields further demonstrates the Company's ability to acquire, create, exploit and maximize value through the rationalization of a portion of its oil and gas assets. We have retained a sixty-five percent interest in the Burrwood and West Delta 83 fields which will allow us to meaningfully participate in the numerous development and exploitation opportunities identified from the recently completed 3-D seismic survey. These identified opportunities, coupled with our other projects in inventory, give us an approximate three-year backlog of drilling and development projects which we believe has the potential to add significantly to our production. In addition, we are continuing to see and evaluate a number of potential acquisition candidates that fit our stated acquisition criteria. Our strengthened balance sheet, combined with the development and exploitation opportunities, an improving commodity price environment and projected cash flow, will allow us to develop projects that should add significant value to the Company and our shareholders."