As previously announced, Samson Oil and Gas USA Inc (a wholly owned
subsidiary of Samson Oil and Gas Limited) entered into a contract to
acquire oil and gas leases, producing oil and gas wells, currently
shut-in wells and associated facilities in North Dakota and Montana for
consideration of $16.5 million. That acquisition was due to close on
February 15th but the continuing volatility in petroleum
markets has prevented Samson from concluding arrangements for financing
of the acquired assets with its primary lender. While Samson remains
optimistic that it will obtain the necessary financing and close the
acquisition, its failure to meet the February 15th deadline entitles the
seller to terminate the purchase agreement at any time. Samson currently
expects that the necessary financing will be obtained on or before
February 29th, 2016, and that the seller will close the sale on that
date. There can be no assurance, however, that the seller will not
exercise its right to terminate before Samson obtains the funds needed
and closes the transaction.
The original purchase price was based upon petroleum prices in the
fourth quarter of 2015, which were significantly higher than current
prices. Given this decline, it was necessary for Samson to re-examine
and revise the expected lifting costs associated with this asset and to
then re-estimate the reserves associated with the acquisition. The
original reserve estimate used, as is normal industry practice was the
historical cost incurred by the current owner. The oil service industry
has responded to the lower oil price environment by generally lowering
the cost of services. As a result, Samson has obtained contract
proposals for well operations which reduces the estimated cost per well.
As a consequence of this and other initiatives, including an
advantageous crude marketing arrangement, Netherland Sewell, &
Associates Inc., have estimated that the properties contain Proved
Reserves of 6.7 million barrels with a Net Present Value of $51.648
million, as at October 1st, 2015, the effective date of the transaction,
and based on current NYMEX strip parameters.
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Oil (MBBL)
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Gas (MMCF)
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NPV10 (M$)
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Proved Developed Producing
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2,147.6
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1,049.2
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$22,754.7
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Proved Developed Non-producing
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1,188.9
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2,240.7
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$11,284.2
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Proved Undeveloped
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3,343.7
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2,340.6
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$17,609.2
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Total Proved
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6,680.3
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5,630.5
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$51,648.1
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Oil pricing used in this estimate represents NYMEX WTI prices as at
February 1st, adjusted for quality, transportation fees and market
differentials. Gas pricing is based on NYMEX Henry Hub prices as at
February 1st, adjusted for energy content, transportation fees and
market differentials. Prices, before adjustments, are as follows:
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Period Ending
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Oil Price ($/Barrel)
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Gas Price ($/MMBTU)
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February 2016
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39.63
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2.300
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December 2016
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36.95
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2.382
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December 2017
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42.36
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2.725
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December 2018
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44.93
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2.837
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December 2019
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46.74
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2.944
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Thereafter
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48.07
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3.065
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The reserve report was as customary, completed as at the effective date
of the transaction, and therefore follows the future prices of oil and
gas as determined at that date and adjusted as described above.
The revised reserve report includes consideration of additional workover
and stimulation activities of the PNDP inventory. This category of
reserve has a very effective capital efficiency because the activity is
relatively in expensive given that it is using existing well bores.
Samson’s Ordinary Shares are traded on the Australian Securities
Exchange under the symbol "SSN". Samson's American Depository Shares
(ADSs) are traded on the New York Stock Exchange MKT under the symbol
"SSN". Each ADS represents 200 fully paid Ordinary Shares of Samson.
Samson has a total of 2,837 million ordinary shares issued and
outstanding (including 230 million options exercisable at AUD 3.8
cents), which would be the equivalent of 14.185 million ADSs.
Accordingly, based on the NYSE MKT closing price of US$0.61 per ADS on
February 16th, 2016, the Company has a current market
capitalization of approximately US$8.8 million (the options have been
valued at an exchange rate of 0.7155). Correspondingly, based on the ASX
closing price of A$0.004 for ordinary shares and a closing price of
A$0.001 for the 2017 options, on February 16th, 2016, the
Company has a current market capitalization of approximately A$11.6
million.
SAMSON OIL & GAS LIMITED
TERRY BARR
Managing Director
Statements made in this press release that are not historical facts may
be forward looking statements, including but not limited to statements
using words like “may”, “believe”, “expect”, “anticipate”, “should” or
“will.” Actual results may differ materially from those projected in any
forward-looking statement. There are a number of important factors that
could cause actual results to differ materially from those anticipated
or estimated by any forward looking information, including uncertainties
inherent in estimating the methods, timing and results of exploration
activities. A description of the risks and uncertainties that are
generally attendant to Samson and its industry, as well as other factors
that could affect Samson’s financial results, are included in the
prospectus and prospectus supplement for its recent Rights Offering as
well as the Company's report to the U.S. Securities and Exchange
Commission on Form 10-K, which are available at www.sec.gov/edgar/searchedgar/webusers.htm.
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