Acquisition price is $135 million, $90 million in cash and issuance to Firewheel of 2,114,523 Resolute shares($45 million)
DENVER, CO – Resolute Energy Corporation reported it has entered into a definitive agreement with Firewheel Energy, LLC, a portfolio company of EnCap Investments, to acquire certain oil and gas properties located in Reeves County, Texas, for a purchase price of $135 million.
The Firewheel Properties consist of 3,293 net acres in our highly productive Delaware Basin operating area, and include interests in thirteen horizontal and fifteen vertical wells, which produce approximately 1,200 net Boe per day.
Approximately 95 per cent of the acreage and most of the production, proved reserves are located within the Resolute-operated Mustang project area in Reeves County.
The remainder of the acreage is also in Reeves County. The Firewheel Properties contain estimated proved reserves of 6.2 MMBoe with PV-10 of $45.8 million, using strip pricing at June 30, 2016.
The acquisition also includes Firewheel’s interest in the Earn-Out Agreement with Caprock Permian Processing LLC and Caprock Field Services LLC. Following the closing of the acquisition, Resolute will receive 100 per cent of all payments from Caprock under the Earn-Out Agreement.
The purchase price for the acquisition is $135 million, consisting of $90 million payable in cash and the issuance to Firewheel of 2,114,523 shares of Resolute Energy common stock, equal to $45 million, based on 90 per cent of the volume weighted average price of our common stock as traded on the NYSE for the 15 trading days ending on Oct. 4, 2016.
The acreage to be acquired represents an approximately 25 per cent increase in Resolute’s net acreage in Reeves County while leaving our gross acreage position essentially unchanged as Resolute already owns interests in all of the same properties.
The completion of this acquisition will result in a higher interest in the production and cash flow generated from our operated wells, further leveraging the work of our field staff.