Deal includes 73,100 acres with daily production of 15,700 mcfpd and 122 bopd current production
IRVING, Texas – International Western Petroleum, Inc. has announced it executed an agreement to purchase all assets of a privately held Houston-based E&P company in the Texas Gulf Coast region.
The acquisition, which consists of three phases, includes assets with current production of approximately $2.0 million per month (based on June production and pricing) and over $1 billion proven, probable and potential reserves.
The agreement is a total purchase price of $2.0 million paid by Aug. 30, scheduled date of closing.
“Based upon our due diligence reviews of the transaction to date, we believe that this opportunity is highly attractive and we are keen to work with our large network of private investors and family offices to conclude the transaction in a timely manner while preparing to use all commercially reasonable efforts to work closely with our advisors and consultants to complete the transaction,” said Dr. Benjamin Tran, chairman of International Western Petroleum.
The agreement also provides for Western Petroleum to issue five million shares of common stock and one million warrants to the Seller.
The first phase of the acquisition assumes the current production of the seller, which is 5,000 mcfpd and 42 bopd with net income of approximately $300,000 per month based on June production and pricing.
Out of the $2.0 million cash payment from Western Petroleum at closing, $1.5 million will be used in the next 30 days for a development program designed to raise the seller’s current production by an additional 2,000 mcfpd and 80 bopd, for a total net income projected at $535,000 per month as cash flow into Western Petroleum.
The seller owns 18,100 acres of oil and gas leases with 36 active wells and proven and probable reserves of approximately $137 million undiscounted and $76 million PV10% at current pricing.
“This transaction is expected to bring significant revenues and assets to INWP, making it a serious oil and gas player along the Texas Gulf Coast. INWP hopes to establish its presence in the region, continuing to utilize a dynamic workforce from a very talented executive team in Houston to build INWP into a world class company via M&A growth,” said Ross Ramsey, CEO of International Western Petroleum.
“Our development plan is to accelerate production during this time of development costs by focusing our concentration on the viability of proved reserves categories.”
Western Petroleum will takeover the seller’s position in acquisition targets of some 55,000 acres and 258 wells (59 active) with current production of 400 bopd and 8700 mcfpd gas.
The second phase of acquisitions, which is scheduled for Sept. 30, 2016, will provide a total of $17.2 million of which $8.5 million will be spent in acquisition cost and $8.7 million will be spent in development cost.
The last phase of acquisitions, which is scheduled for November 30, 2016, will provide a total $26 million
of which $20 million will be spent in acquisition cost and $6 million will be spent in development cost.
All leases are along the Texas Gulf Coast and are conventional asset plays.
Combined assets, after the all-phase acquisition from the seller, including its acquisition targets, will be 73,100 acres with daily production of 15,700 mcfpd and 122 bopd current production, or $2.0 million per month at current production.
Western Petroleum development programs seek to raise the current income to $5 million per month net income based on operations.
Western Petroleum will assume the seller’s Houston-based office and selected staff, continuing operations on the acquired assets and production income.