Warren Resources Release
- $47MM sale of non-core Wyoming CBM assets
- Continued focus on de-levering and creating liquidity
NEW YORK, June 16, 2015 (GLOBE NEWSWIRE) — Warren Resources, Inc. (WRES) today announced the execution of agreements to divest its Atlantic Rim CBM assets to Escalera Resources, Co. (ESCR). Under the terms of the transaction agreements, Warren will sell all of its interests in its shallow depth coal bed methane assets, which are located in the Atlantic Rim area of the Washakie Basin in Carbon County, Wyoming, appurtenant midstream pipeline assets, and an undivided 30% of its interest in certain deep rights associated with Warren’s former leases in the Atlantic Rim area, to Escalera with an effective date of April 1, 2015. The total purchase price for these assets will be $47 million, with $42 million payable in cash at closing. Following consummation of the transaction, Warren will retain 70% of the operated deep rights associated with Warren’s former leases in the Atlantic Rim area, across 68,700 gross acres, which are currently being evaluated for potential upside in a number of the deep formations present. The sale is subject to closing conditions and adjustments, including completion of the purchaser’s financing.
Lance Peterson, Warren’s Interim Chief Executive Officer, said: “We are extremely pleased to announce the sale of our Atlantic Rim assets to Escalera. This strategic divestiture is another important step forward in our continuing strategy to give Warren the ability to transact on future high growth opportunities as we further reduce debt and increase our liquidity.”
With the closing of the transaction, Warren expects that its pro forma available liquidity will increase to approximately $61 million. Mr. Peterson said: “Upon Warren’s recent closing of our refinancing with GSO Capital Partners and Franklin Square Capital Partners, we highlighted the benefits of having a credit agreement that gives Warren the flexibility to divest non-core properties, including the Atlantic Rim CBM assets which represent less than 10% of Warren’s 2014 EBITDA pro forma the Marcellus acquisition, and pay down debt with the option to re-draw funds in the future at a nominal cost. Closing this transaction with Escalera will allow us to take advantage of that flexibility to continue deleveraging the company, thereby reducing interest expense and to access additional liquidity available in the future as we implement our growth strategy.”
Mr. Peterson commented: “Divesting our Wyoming assets fits into Warren’s corporate mission to shift our focus toward pursuit of the high-growth, strategic acquisition opportunities for the Company. Over the past six months we’ve worked methodically to right-size CAPEX, capture G&A and LOE savings, align ourselves with a strong financial partner, retire debt, and sell non-core assets — together, all these measures boost the Company’s liquidity and position us for growth.”
Warren has scheduled a conference call to discuss the transaction at 11:00 a.m. EDT today. To participate in the Warren conference call, callers in the United States and Canada can dial (866) 270-6057, or if international dial (617) 213-8891. The Conference I.D. for callers is 34680571. The Company has posted presentation materials that will accompany the conference call and should be accessed through the Company’s website at www.warrenresources.com on the homepage under “Latest News”, as well as in the “For Investors” section under “Featured Report”. If you are unable to listen to the live call, a recording of the call will be available for delayed playback for one week beginning at approximately 3:00 p.m. on June 16, 2015. To access the replay, dial (866) 233-1854, or if international dial (617) 614-4949. The confirmation code for the replay is 73273612.
About Warren Resources
Warren Resources, Inc. is an independent energy company engaged in the acquisition, exploration, development and production of domestic oil and natural gas reserves. Warren’s operating activities are primarily focused on oil in the Wilmington field in the Los Angeles Basin in California and on natural gas in the Marcellus Shale in Pennsylvania.
Escalera Resources Release
Escalera Resources Announces $47 Million Purchase Agreement to Expand Atlantic Rim Holdings
Escalera Resources Co. (ESCR)announced today that it has signed an asset purchase and sale agreement for the strategic acquisition of producing wells and leasehold interests from Warren Resources, Inc. (“Warren”)(WRES). The assets, located in the Atlantic Rim Area of the Washakie Basin, Wyoming, are highly complementary to Escalera’s existing holdings and consist primarily of Warren’s 74% operated working interest in the Spyglass Hill Unit (in which Escalera already holds a 22% non-operated working interest), an 11% non-operated working interest in Escalera’s Catalina Unit (of which Escalera operates with an 86% interest), and midstream gathering and pipeline assets within the Spyglass Hill Unit. Current production from the assets is approximately 14 mmcf/d and proved developed reserves were 83 Bcf as of April 1, 2015.
The Spyglass Hill Unit covers approximately 97,000 gross acres and Warren currently operates 367 producing and injection wells in the unit. Production from the Spyglass Hill Unit currently feeds into a Wyoming Interstate Company (“WIC”) pipeline through the midstream assets that are part of the transaction and include a 59 mile long pipeline. The acquisition also includes certain deep rights’ interests in the Atlantic Rim.
Charles F. Chambers, Escalera’s CEO, commented, “This acquisition will consolidate the major operating and economic interests in the Atlantic Rim, and is expected to be immediately accretive to cash flows, allowing for a more cost efficient capital allocation and decision-making framework for operations in the area moving forward.”
The transaction has an effective date of April 1, 2015, with an expected closing in mid-August 2015, and is subject to confirmatory due diligence and the arrangement of financing.
About Escalera Resources Co.
Escalera Resources Co. (“Escalera”) is headquartered in Denver, CO, with executive offices in Houston, TX and a regional office in Casper, WY. Escalera explores, develops and transports natural gas in the U.S. Escalera is seeking strategic acquisitions of abundant, low cost natural gas assets that are currently undervalued or underutilized; and identifying alternative ways to enhance the value of its dry natural gas reserves.