Los Angeles Basin Oil Field Acquisition Update

Source Press Release
Company XState Resources Limited 
Tags Asset Deals, Deals, Upstream Activities
Date November 15, 2016
  • Xstate is acquiring low cost reserves that will become cheap flowing barrels over time.  
  • Proven (1P) reserves of 6.2Mmboe and Proven & Probable (2) reserves of 9.9Mmboe net to Xstate that have been independently certified by respected global firm Netherland, Sewell & Associates, Inc.  
  • The implied reserve acquisition multiple based on 1P reserves is an attractive US$2.10/bbl.
  • The implied per flowing barrel metric is anticipated to be US$56,750 per flowing bbl at Closing assuming 1,100 barrels of oil per day of gross production (“bopd”).
  • The Sansinena field hassignificant existing strategic infrastructure forfuture planned production growth and associated real estate property that can be sold to fund planned development costs.
  • Subject to due diligence, Xstate considers the price reflects outstanding value for existing reserves and production with high potential upside, particularly associated with the low risk infill drilling program.

Xstate Resources Limited (ASX:XST) (“Xstate” or “the Company”) is pleased to provide an update and further material information in regards to the Los Angeles Basin Oil Fields transaction announced on 4 November 2016.

The Xstate Board and management consider the proposed transaction to be a transformational event for the Company.  The acquisition of the Sansinena oil field provides shareholders with immediate production, cash flow and low cost reserves that have been certified by Netherland, Sewell & Associates, Inc. (NSAI), one of the most respected global firms in independent reserves reporting.  

Xstate is acquiring access to value accretive production based on future production growth.    The implied per flowing barrel metric is anticipated to be US$56,750 at financial close, assuming production of 1,100 gross bopd.   

The joint venture has plans to grow production to 2,000-5,000 gross bopd from future cash flows in the medium to long term. Existing infrastructure at Sansinena issufficient to support production at the upper end of this range.

Sansinena is a world-class asset with significant development drilling upside that represents a multi-year drilling opportunity in conventional oil wells.  The new Operator, Matrix Oil Corp., has identified numerous production enhancement opportunities and has gained access to significant reserves by lowering LOEs and drilling costs.   

Importantly these costs reductions are sustainable and will allow the joint venture to target a vast number of new Proven Undeveloped (PUD) infill drilling locations. It is important to note these PUD targets aren’t exploration targets but rather identified wells targeting proved productive undrained reservoirs.  

Development drilling is currently underway to substantially increase production from current levels (500bopd as at 31 October 2016) to +1,100bopd by financial close based on existing well enhancements and three new in‐fill wells (PUDs).

An investor briefing pack containing further details of the acquisition forms part of this announcement.  

Source: EvaluateEnergy® ©2017 EvaluateEnergy Ltd