Samson Oil & Gas Updates Status of Foreman Butte Acquisition
February 16 2016 - 8:00PM
Business Wire
As previously announced, Samson Oil and Gas USA Inc (a wholly
owned subsidiary of Samson Oil and Gas Limited) entered into a
contract to acquire oil and gas leases, producing oil and gas
wells, currently shut-in wells and associated facilities in North
Dakota and Montana for consideration of $16.5 million. That
acquisition was due to close on February 15th but the continuing
volatility in petroleum markets has prevented Samson from
concluding arrangements for financing of the acquired assets with
its primary lender. While Samson remains optimistic that it will
obtain the necessary financing and close the acquisition, its
failure to meet the February 15th deadline entitles the seller to
terminate the purchase agreement at any time. Samson currently
expects that the necessary financing will be obtained on or before
February 29th, 2016, and that the seller will close the sale on
that date. There can be no assurance, however, that the seller will
not exercise its right to terminate before Samson obtains the funds
needed and closes the transaction.
The original purchase price was based upon petroleum prices in
the fourth quarter of 2015, which were significantly higher than
current prices. Given this decline, it was necessary for Samson to
re-examine and revise the expected lifting costs associated with
this asset and to then re-estimate the reserves associated with the
acquisition. The original reserve estimate used, as is normal
industry practice was the historical cost incurred by the current
owner. The oil service industry has responded to the lower oil
price environment by generally lowering the cost of services. As a
result, Samson has obtained contract proposals for well operations
which reduces the estimated cost per well.
As a consequence of this and other initiatives, including an
advantageous crude marketing arrangement, Netherland Sewell, &
Associates Inc., have estimated that the properties contain Proved
Reserves of 6.7 million barrels with a Net Present Value of $51.648
million, as at October 1st, 2015, the effective date of the
transaction, and based on current NYMEX strip parameters.
Oil (MBBL) Gas (MMCF)
NPV10 (M$) Proved Developed Producing
2,147.6 1,049.2 $22,754.7 Proved
Developed Non-producing 1,188.9 2,240.7
$11,284.2 Proved Undeveloped 3,343.7
2,340.6 $17,609.2 Total Proved
6,680.3 5,630.5 $51,648.1
Oil pricing used in this estimate represents NYMEX WTI prices as
at February 1st, adjusted for quality, transportation fees and
market differentials. Gas pricing is based on NYMEX Henry Hub
prices as at February 1st, adjusted for energy content,
transportation fees and market differentials. Prices, before
adjustments, are as follows:
Period Ending
Oil Price ($/Barrel) Gas Price
($/MMBTU) February 2016 39.63 2.300
December 2016 36.95 2.382 December 2017
42.36 2.725 December 2018
44.93 2.837 December 2019 46.74
2.944 Thereafter 48.07 3.065
The reserve report was as customary, completed as at the
effective date of the transaction, and therefore follows the future
prices of oil and gas as determined at that date and adjusted as
described above.
The revised reserve report includes consideration of additional
workover and stimulation activities of the PNDP inventory. This
category of reserve has a very effective capital efficiency because
the activity is relatively in expensive given that it is using
existing well bores.
Samson’s Ordinary Shares are traded on the Australian Securities
Exchange under the symbol "SSN". Samson's American Depository
Shares (ADSs) are traded on the New York Stock Exchange MKT under
the symbol "SSN". Each ADS represents 200 fully paid Ordinary
Shares of Samson. Samson has a total of 2,837 million ordinary
shares issued and outstanding (including 230 million options
exercisable at AUD 3.8 cents), which would be the equivalent of
14.185 million ADSs. Accordingly, based on the NYSE MKT closing
price of US$0.61 per ADS on February 16th, 2016, the Company has a
current market capitalization of approximately US$8.8 million (the
options have been valued at an exchange rate of 0.7155).
Correspondingly, based on the ASX closing price of A$0.004 for
ordinary shares and a closing price of A$0.001 for the 2017
options, on February 16th, 2016, the Company has a current market
capitalization of approximately A$11.6 million.
SAMSON OIL & GAS LIMITED
TERRY BARRManaging Director
Statements made in this press release that are not historical
facts may be forward looking statements, including but not limited
to statements using words like “may”, “believe”, “expect”,
“anticipate”, “should” or “will.” Actual results may differ
materially from those projected in any forward-looking statement.
There are a number of important factors that could cause actual
results to differ materially from those anticipated or estimated by
any forward looking information, including uncertainties inherent
in estimating the methods, timing and results of exploration
activities. A description of the risks and uncertainties that are
generally attendant to Samson and its industry, as well as other
factors that could affect Samson’s financial results, are included
in the prospectus and prospectus supplement for its recent Rights
Offering as well as the Company's report to the U.S. Securities and
Exchange Commission on Form 10-K, which are available at
www.sec.gov/edgar/searchedgar/webusers.htm.
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version on businesswire.com: http://www.businesswire.com/news/home/20160216006835/en/
Samson Oil and Gas LimitedTerry Barr, CEO, 303-296-3994 (US
office)