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(Sharecast News) - Rocky Mountains-focussed oil and gas company Zephyr Energy has entered into a binding agreement to acquire further non-operated working interests in currently producing and near-term production wells in the Williston Basin, in the US state of North Dakota.
The AIM-traded firm said the assets would be an "ideal addition" to its existing asset portfolio, with the cash flows generated set to enable it to proceed with the fast-track development of its flagship Paradox project, among other things.
Under the terms of the acquisition, which was expected to close by 22 December, Zephyr would acquire working interests in 163 currently producing wells, with approximately 871 barrels of oil equivalent per day being produced net to the assets in September.
The acquisition also included 18 proved not producing, and drilled but uncompleted wells, all of which had been drilled and were expected to come online in the coming months.
When online, which was expected in 2022, the wells were expected to increase net production of the assets above 1,100 barrels of oil equivalent per day.
It also included 47 proved but undeveloped locations for future drilling, which the board said demonstrated the "long-term potential" of the assets.
The assets were spread across 22 separate drilling pads in Mountrail County, North Dakota and were estimated by independent reserve consulting firm Sproule to hold a net 2.764 million barrels of oil equivalent of proven reserves.
Consideration for the acquisition, which remained subject to various closing adjustments, was $36m, of which $3m would be paid immediately as a non-refundable deposit.
Zephyr said it was evaluating a range of financing alternatives to fund the rest of the consideration via structured debt, including alternatives which would be non-dilutive to equity holders.
"The acquisition announced today is another landmark deal for Zephyr and will further transform the company by adding a significant, low-decline, low-risk, high margin production base - with both near and long-term upside exposure into a further 65 wells, 13 of which have already been drilled and are expected to be online soon," said chief executive officer Colin Harrington.
"The assets are located in the same core Williston Basin field as many of our existing non-operated wells and will be a significant complement to our current non-operated portfolio."
Harrington said the assets were in a "prime location" in the Sanish Field in the Williston Basin, with all wells operated by Whiting, a basin producer already serving as operator of a number of the company's existing wells.
"I look forward to further developing our relationship with Whiting as we grow our asset base in the Williston Basin."
At 1437 GMT, shares in Zephyr Energy were up 4.41% at 7.1p.
16 Nov 2023 04:30
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