U.S. Energy to buy Bakken formation assets
U.S. Energy has entered into a Memorandum Of Understanding (MOU) with APEG I Partners, a Texas partnership (APEG), to acquire all of APEG’s interest in 67 wells concentrated in Williams and McKenzie Counties, North Dakota. APEG is an affiliate of APEG Energy II, L.P., the Company’s largest stockholder.
The transaction will add highly complementary assets to the Company’s existing portfolio in North Dakota, with similar operators and development potential.
The closing of the transaction will result in the acquisition of approximately 1.1 MMBOE of proved developed reserves (79% oil) and 400 BOEPD of current production across 1,600 net acres.
U.S. Energy expects the Transaction will create additional opportunities for development and acreage swaps that would permit the Company to continue consolidating its leasehold position in the area.
The total consideration for the Transaction is approximately $17.8 million, consisting of a combination of cash, issuance of common and preferred stock of the company and the assumption of APEG’s outstanding commodity derivatives.
Additionally, U.S. Energy plans to establish a new $8.0 million revolving credit facility, for which the company has received a non-binding term sheet from a traditional reserved based lender.
Subsequent to closing, U.S. Energy plans to continue reducing leverage through positive cash flow from operations and potential strategic dispositions, using the proceeds to reduce borrowings under the new credit facility. If completed, the transaction will have an effective date of July 1, 2018.
The closing of the transaction is conditioned on obtaining the required debt and equity financing, Nasdaq approval and the approval of the stockholders of the company at a special meeting to be scheduled for December 2018. ■