Elk Petroleum Limited has announced that it has signed a Purchase and Sale Agreement (PSA) to sell the Ash Creek oilfield. Elk expects the sale to be completed on or about September 22.
Elk announced on June 5 that it was putting all of its Wyoming assets up for sale, including its interests in the Grieve CO2-EOR (enhanced oil recovery) project, the Grieve oil pipeline, and the Ash Creek oilfield. Meagher Energy Advisors in Denver was contracted to broker the sale of these assets. Bids closed on August 1 and Elk received a number of complying bids for the Grieve and Ash Creek assets.
On August 18, Elk’s US subsidiary, Elk Petroleum Inc., signed a PSA to cover the sale of the first of these assets, namely for the sale of the Ash Creek oil field to Sunshine Valley Petroleum Corporation and PRE Resources, LLC. The purchase price is $1.7 million. Subject to due diligence, closing of the transaction will occur on or about September 22. This transaction will see the Company record a book impairment of approximately $1.9 million.
Commenting on the sale, Scott Hornafius, Elk’s CEO remarked, “The sale of Ash Creek is part of refocusing the Company on CO2-EOR projects as well as strengthening the Company’s capital base.
All things considered and given the state of the market for such assets in the US, we are pleased with the transaction and the monetisation of this asset for market value. As previously advised the funds will now be applied to refocus its business on CO2-EOR projects, such as at the recently acquired Singleton oil field in Nebraska.”
Elk has narrowed the field of potential buyers or farm-in partners for the Grieve CO2-EOR project and the Grieve oil pipeline to two companies. Negotiations are continuing on the final structure of a deal with the intention to provide Elk with substantial working capital and/or allow Elk to retain an interest in the Grieve project without having to make any further capital investments to get to first oil. An update will be provided to the market when a definitive agreement has been signed.
Adapted from a press release by David Bizley
Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/20082014/elk-petroleum-in-wyoming-asset-sale/