DENVER & PERTH, Australia–(BUSINESS WIRE)–Samson Oil & Gas Limited (ASX: SSN; NYSE MKT: SSN):
North Stockyard Sale
Samson sold, late on Friday, October 28th, its interest in the North Stockyard field for $15 million by the receipt of the balance of $13.95 million of the purchase price.
$11.5 million of the sales proceeds will be used to reduce the outstanding amount on our debt facility to $19 million. Samson will use the balance of the proceeds for working capital and to reduce its current hedge positions in line with its post-sale production.
With the sale, Samson can now focus on development of its recently acquired Foreman Butte property that, because it was acquired at an advantageous price, provides the opportunity to grow the Company’s reserve base.
Since the acquisition of Foreman Butte, Samson has already grown the asset from a Proved Developed Producing (PDP) reserve with an NPV10 of $22 million to a NPV10 of $45 million as at June 30th which has more than replaced the PDP reserve value of North Stockyard of $15 million.
As a result of the closing and the reduction of outstanding balance Samson expects that it should be in a position early in 2017 to negotiate and execute a revised debt facility with Mutual of Omaha Bank. This new facility will build on the excellent relationship that has been established and will give Samson ample liquidity to further develop the Foreman Butte project or to take advantage of further acquisitions at an attractive price.
The next round of activity in Foreman Butte will take two directions. One will be to utilize a fresh water cleanout workover technique that has proved successful in the Evans 1-10 well which has demonstrated a doubling of fluid production and secondly to optimize the pumps across the project. A field wide fluid level survey has revealed that the majority of our producing wells are not being pumped to the reservoir capacity. Therefore pump change outs, stroke length, and stroke rate improvements or a combination thereof will be used to help these wells pump at an optimum rate. While relatively inexpensive, these pump enhancements should boost both production and reserves in the near term.
Samson is due to lodge its ASX quarterly report and Appendix 5b with the Australian Securities Exchange on Monday, October 31st, and its SEC 10Q on November 14th, both reports will be available on the company’s website.