Merger expected to significantly increase Company production to over 3,000 boepd and reserves to approximately $600 million
DANVILLE, CA / ACCESSWIRE / December 30, 2015 / PEDEVCO Corp. d/b/a Pacific Energy Development (NYSE MKT: PED) (the “Company”) today announced the entry into an Agreement and Plan of Merger and Reorganization (“Merger Agreement”) with GOM Holdings, LLC, a privately-held Delaware company (“GOM”), whereby the Company will acquire 100% ownership of GOM in a merger scheduled to close as early as January 19, 2016 and no later than February 29, 2016, subject to standard closing conditions and certain conditions precedent. Immediately prior to the entry into the Merger Agreement, the Company and Dome Energy mutually agreed to terminate their pending merger due to the continued downturn in oil prices and challenging market environment. The Company believes the merger with GOM is much more accretive to the Company and its shareholders.
GOM currently produces approximately 2,700 barrels of oil equivalent per day (“BOEPD”) net from a core operated portfolio of oil and gas assets located in the United States, and has an approximate $500 million PV-10 value of its proved (P1) reserves located in Texas, California and Louisiana, as estimated by leading independent reservoir engineering firms Netherland, Sewell & Associates, Inc. and DeGolyer and MacNaughton.
Commenting on these matters, Mr. Frank Ingriselli, the Company’s Chairman and Chief Executive Officer, commented, “We are very pleased and excited to announce our planned combination with GOM, a combination which we believe will bring substantial value to our shareholders even in this low oil price environment, creating a viable and strong operator with a diverse portfolio of producing assets, manageable debt and significant drilling inventory with expected returns of greater than 40%, even at our currently low oil prices, providing additional tremendous upside potential as the oil industry recovers. GOM’s current production of approximately 2,700 Boe/d (net) would immediately boost our daily production to over 3,000 Boe/d (net), and our combination with GOM is anticipated to grow the PV-10 of our proven reserves to nearly $600 million. We believe GOM’s assets provide strong returns and low risk. For example, GOM’s 2-well redevelopment plan of one of its assets in Texas alone is expected to have a payback of 7-8 months and a 13x return on investment at current pricing, and deliver an additional about 5,000 Boe/d (net) of oil once online. GOM has an inventory of projects it can bring to the Company, which, when coupled with our D-J Basin assets, form a large portfolio of oil and gas projects that at today’s current oil prices have potential to provide very favorable returns and exciting growth to our investors.”
“While we were initially hopeful the planned transaction with Dome would provide synergies and help us weather the current oil price environment, we believe the GOM transaction, which will significantly increase the size of our company, will allow more institutional sponsorship, better access to capital, and will strategically position us for profit and growth both now and as the oil market improves. Most importantly, this transaction should immediately be accretive to shareholder value and be well-received by the market, as we estimate the value of the acquired assets, production and operations in excess of $500 million, which we will be paying for through a combination of assumption of debt and the issuance of approximately $300 million of our stock which the parties are valuing at $0.45 per share, which is significantly higher than our recent closing prices. We look forward to moving forward swiftly to close the transaction with GOM in the first quarter of 2016.”
About Pacific Energy Development (PEDEVCO Corp.)
PEDEVCO Corp, d/b/a Pacific Energy Development (NYSE MKT: PED), is a publicly-traded energy company engaged in the acquisition and development of strategic, high growth energy projects, including shale oil and gas assets, in the United States. The Company’s principal asset is its D-J Basin Asset located in the D-J Basin in Colorado. Pacific Energy Development is headquartered in Danville, California, with an operations office in Houston, Texas.
About GOM Holdings, LLC
GOM Holdings, LLC is a privately-held Houston-based upstream energy company primarily focused on the acquisition, development, and production of oil and gas from shallow offshore and onshore assets located in Texas, California and Louisiana. GOM currently produces approximately 2,700 barrels of oil equivalent per day (“BOEPD”) net from a core operated portfolio of oil and gas assets, and has an approximate $500 million PV-10 value of its P1 reserves located in the United States, as estimated by leading independent reservoir engineering firms Netherland, Sewell & Associates, Inc. and DeGolyer and MacNaughton.