Posted by Katie Woodward - OilVoice
PetroShare Corp. (OTCQB: PRHR), today announced it has entered into a Purchase and Sale Agreement with an undisclosed third party for producing vertical wells and associated leases totaling approximately 15,994 gross (11,169 net) acres principally in Adams and Weld Counties, Colorado. The Company has agreed to pay the Seller $5.0 Million in cash consideration, subject to closing adjustments. Closing is scheduled for December 22, 2016, subject to customary closing conditions such as environmental and title diligence.
Approximately 3,480 gross (2,588 net) acres are located within the Company's Niobrara / Codell target area in Adams County within the Southern Core portion of the Wattenberg Field in the DJ Basin of northeastern Colorado. Much of the acreage is currently held by production. The Company's strategic partner and lender, Providence Energy Operators, LLC, has agreed to purchase 50% of the wells and oil and gas leases proposed to be acquired by the Company.
This acquisition would add approximately 63 barrels of oil equivalent per day (31 BOE/D net to the Company's interest) of production from 32 producing wells with upside potential through workovers and recompletions. The acquisition would also provide drilling potential for up to 60 (30 net) Niobrara and Codell standard and extended length horizontal wells and includes leaseholds with up to 40 identified conventional vertical well locations targeting the D and J Sands which are prevalent and can be highly productive across much of the DJ Basin. The Company believes that additional D and J Sand conventional locations can be delineated with modern 3D seismic and certain areas may have the potential to be developed with horizontal wellbores. PetroShare will serve as the operator of the vertical wells included in the assets proposed to be acquired.
"PetroShare's asset base in the Wattenberg Field and DJ Basin would increase greatly with completion of this Agreement," stated Stephen J. Foley, CEO of PetroShare. "Upon successful closing, we would have more than 8,164 net acres across our area of interest, of which 3,874 net Company acres are in the Niobrara / Codell Southern Core area of the Wattenberg Field. The Company's production profile is expected to increase at a rapid pace over the next several months, as some of the first horizontal wells in which the Company is participating as a non-operator are currently either in early stages of production or completion activities are underway. Several other non-operated wells are scheduled for completion in the first quarter of 2017. Managements' relationships and experience in real estate development as well as its midstream knowledge continues to bring opportunities to the Company that we believe will provide value to all of our stakeholders."
Frederick J. Witsell, President, added, "This proposed transaction is consistent with our objective of pursuing accretive asset acquisitions with geo-mechanical merit in our core areas of focus. The leasehold has potential for both conventional and horizontal development of multiple pay horizons which provide the opportunity for efficient value creation."
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