Delta to Sell Stake in Piceance Basin Assets
Delta Petroleum has entered into a non-binding letter of intent with Opon International LLC (Opon) to sell a 37.5% non-operated working interest in the Company's Vega Area assets located in the Piceance Basin for total consideration of $400 million. It is expected that $225 million of the total consideration will be used by Delta for the development of the Vega Area over the next three years. Delta intends to use the remainder of the total consideration for its balance sheet obligations and general working capital purposes.
Delta has also agreed to issue to Opon at closing, warrants to purchase 13.3 million shares of Delta common stock at $1.50 per share and 5.7 million shares at $3.50 per share. Delta will provide further details of the transaction upon the execution by Delta and Opon of definitive agreements. The letter of intent is subject to customary due diligence, negotiation and execution of definitive binding agreements. This offer is contingent upon the buyer's ability to arrange financing. Delta has granted Opon a 60-day exclusive period to finalize the transaction, which is expected to close on or before June 1, 2010. Delta will retain operations of the Vega Area subject to a joint venture agreement with Opon.