Samson Oil & Gas Pending Asset Sale
DENVER & PERTH, Australia–(BUSINESS WIRE)–As previously advised, Samson Oil and Gas USA, Inc, a wholly-owned
subsidiary of Samson Oil and Gas Limited (ASX:SSN and OTCQB:SSNYY),
entered into a Purchase and Sale Agreement (PSA) with Eagle Energy
Partners, I, LLC (Eagle or Buyer) for the sale of substantially all of
Samson’s Foreman Butte Project, located in the Williston Basin in North
Dakota and Montana, for cash consideration of US$40 million, effective
January 1, 2018 (subject to normal closing adjustments).
Pursuant to the PSA, as amended, the transaction was scheduled to close
on October 15th but failed to do so. As a result, the PSA has
now expired.
Samson remains in discussions with the Buyer but is now actively seeking
an alternate buyer for the asset. The recent appreciation in the price
of oil has enhanced the reserve value of the asset. The Company is
therefore confident that interest in the asset will remain high. All
reserves shown for September 30th, 2018 and June 30th,
2017 are designated as 1P reserves.
Reserve categories
PDP – proved developed producing
PDNP – proved developed not producing
PUD – proved undeveloped
The reserve estimate, net of Samson’s economic interest, as at September
30th, 2018 is as follows:
| Reserve Category | Net Oil – MSTB | Net Gas – MSTB | CAPEX $M | BFIT Net Cash Flow $M, US | Net Income Discounted 10% $M, US | |||||||||||||||
| PDP | 2,799 | 849 | – | $75.93 | $45.61 | |||||||||||||||
| PDNP | 351 | 242 | $0.17 | $7.22 | $4.60 | |||||||||||||||
| RATCLIFFE & NESSON PUD | 2,709 | 2,245 | $16.02 | $82.40 | $52.43 | |||||||||||||||
| Total | 5,859 | 3,356 | $16.19 | $165.55 | $102.64 |
The reserve estimate is internal and not audited.
The total proved reserve estimate at September 30, 2018 as disclosed
above has changed from the most recently previously disclosed net
reserve estimate as at June 30, 2017 of $69.8 million shown below:
| Reserve Category | Net Oil – MSTB | Net Gas – MSTB | CAPEX $M | BFIT Net Cash Flow $M, US | Net Income Discounted 10% $M, US | ||||||||||||||||||
| PDP | 3,115 | 1,640 | – | $71.2 | $39.49 | ||||||||||||||||||
| PDNP | 143 | 242 | $0.1 | $2.0 | $1.41 | ||||||||||||||||||
| RATCLIFFE & NESSON PUD | 2,239 | 1,796 | $13.3 | $48.8 | $28.91 | ||||||||||||||||||
| Total | 5,497 | 3,678 | $13.4 | $122.0 | $69.81 | ||||||||||||||||||
No changes to the ownership or royalty interest of the wells included in
the report have been made from June 30, 2017 to the September 30, 2018.
The PDP wells have been produced during this time period and the
reserves have been adjusted for this production roll off. The most
significant factor impacting the increase in the value of the reserves
noted above is the impact of the increased global oil price. Commodity
prices, after being adjusted for transport and quality differentials,
used in the estimate at June 30, 2017 were:
| Period Ending | Oil/BBL -$ | Gas/MCF -$ | ||||||
| 2017 | 45.98 | 3.096 | ||||||
| 2018 | 48.12 | 2.993 | ||||||
| 2019 | 49.41 | 2.853 | ||||||
| 2020 | 50.52 | 2.846 | ||||||
| 2021 | 51.77 | 2.878 | ||||||
| Thereafter | 53.03 | 2.923 |
As detailed below, the commodity prices used in the current reserve
value have increased significantly in line with the increase in global
oil prices. Gas prices have not moved as significantly, this is less
impactful on the reserve value as the gas reserves are less material to
the reserve value.
Commodity prices used in this estimate are as at September 30th,
2018 and have been adjusted for transport and quality differentials and
therefore represent a realized well head price.
The commodity prices are as follows:
| Period Ending | Oil/BBL -$ | Gas/MCF -$ | ||||||
| 2018 | 68.60 | 3.01 | ||||||
| 2019 | 68.24 | 3.17 | ||||||
| 2020 | 64.68 | 2.95 | ||||||
| 2021 | 60.71 | 2.85 | ||||||
| Thereafter | 52.95 | 2.83 |
The PDP and PDNP reserve estimates and forecasts of future production
rates are based on historical performance and analogy data. If no
production decline trend has been established, future production rates
and decline curves are based on analogous wells. If a decline curve is
established, this trend is used as the basis for estimating future
production rates.
The reserve estimates utilize historical operating costs of the wells
and leases, subject to the report, and are held constant for the life of
a well. Development costs are based on authorizations for expenditure
for the proposed work or actual costs for similar projects. Abandonment
costs are assumed to be offset by the salvage value as all of these
projects are located onshore.
The reference point used in the reserve estimates is the sales point,
and the reserves and their value are wholly attributable to the
Consolidated Entity’s economic interest, net of royalties, operating and
development costs, and production and ad valorem taxes.
PUD estimates are based on a drill and complete estimated expenditure of
$375,000 per well. As these wells are infill drilling, all offtake and
production infrastructure is readily available.
Our reserves were prepared by a practitioner with 22 years of industry
experience in geologic and engineering review and analysis and a
Bachelor of Science in Geological Engineering from Colorado School of
Mines. Additionally, the Chief Executive Officer, Terry Barr, is
responsible for overseeing the preparation of the Company’s reserves
report. The CEO is a petroleum geologist who holds an Associateship in
Applied Geology and has over 45 years of relevant experience in the oil
and gas industry.
The reserves included in this release were estimated using deterministic
methods and presented as incremental quantities.
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 the risks
that the anticipated sales transaction will not close or that the
purchase price will be materially reduced on account of potential
liabilities uncovered during due diligence as well as 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.
Contacts
Samson Oil and Gas Limited
Terry Barr, CEO
303 296 3994 (US
office)
