Contango Oil & Gas Company (NYSE MKT:MCF) has announced that it has entered into an agreement with a private oil and gas company to purchase one-half of seller’s interests in approximately 12 100 gross undeveloped acres (~5000 net acres) for up to US$25 million in the Southern Delaware Basin of Texas, currently one of the most active and economically attractive oil and gas basins in the United States.
The purchase price is comprised of US$10 million in cash at initial closing and US$10 million in carried well costs expected to be paid over the next 14 months. Certain additional contingent payments upon success would increase total consideration to US$25 million. The purchase is subject to finalisation of title due diligence and customary closing conditions and adjustments with an initial closing expected later this month. Specifics of the purchased acreage are as follows:
Allan D. Keel, the company’s President and Chief Executive Officer, said:
“We are pleased to be in one of the premier oilfields in North America. This new Permian presence provides a multi-year inventory across a stacked pay formation that we expect to commence drilling in September or October of this year with our existing staff. The unique deal structure of part cash, part carry and part success fee gives us some financial flexibility and allows us to grow production, cash flow and reserves through a capital programme that is expected to be funded with internally generated cash flow. As we grow and develop our Permian asset, we will continue to focus on maintaining our strong balance sheet and financial flexibility.”
Adapted from a press release by Louise Mulhall
Read the article online at: https://www.oilfieldtechnology.com/exploration/22072016/contango-enters-into-agreement-to-purchase-southern-delaware-basin-acreage/