Corporate News Blog - US Energy Sells Off Certain Non-Operated Assets at The Williston Basin
LONDON, UK / ACCESSWIRE / October 12, 2017 / Pro-Trader Daily takes a look at the latest corporate events and news making the headlines for US Energy Corp. (NASDAQ: USEG), following which we have published a free report that can be viewed by signing up at http://protraderdaily.com/optin/?symbol=USEG. The Company announced on October 10, 2017, that it has signed an agreement to sell off certain non-operated assets at the Williston Basin. The Company raised approximately $6.2 million from the asset sale transaction which includes $2 million in cash. For immediate access to our complimentary reports, including today's coverage, register for free now at:
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Transaction Details
The sale of the assets at the Williston Basin would be effective as on August 01, 2017, and the Board of Directors of the Company unanimously approved the sale. The transaction was closed on October 05, 2017. The sold off properties had proven reserves of PV-10 valued $5.2 million as on June 30, 2017.
The transaction gives a much-needed financial relief to the Company which allows it to write off nearly 84% of its outstanding liabilities, i.e. approximately $4.2 million, which were pending as on June 30, 2017. The cash realized from the transaction would allow the Company to improve the status of its working capital. The transaction has a dual impact of reducing the Company's liabilities, and at the same time improving its cash position allowing the Company to concentrate on planning for its future growth and look at acquiring larger projects.
Commenting on the sale of the assets, David Veltri, Chairman and Chief Executive Officer (CEO) of US Energy, said:
"We are pleased to have resolved the previously disclosed disputes regarding the divested properties and to have removed the associated overhang that has been detrimental to the Company since 2015. It should also be noted that due to the outstanding liabilities associated with the divested assets, US Energy had not received any revenue from the properties since 2015 and was not forecasted to receive further revenue until 2020. In addition, approximately 75% of the acreage for future potential down-spacing had been previously divested."
Background
The assets sale transaction comes in the wake of the debt swap agreement signed by the Company on October 05, 2017, with its sole lender APEG Energy II, L.P. ("APEG") to pay off nearly $6 million in debts. Austin, Texas-based private equity firm Angelus Private Equity Group, LLC ("Angelus") had formed the APEG Energy II, L.P. to make energy investments across the capital structure through multiple platforms. Angelus specializes in investments primarily in development stage real estate properties and growth-oriented domestic energy assets.
As per the terms of the "Exchange Agreement", APEG agreed to receive 5,819,270 new shares of US Energy having par value of $0.01 per share against approximately $4.46 million of outstanding debts. The transaction valued the shares at $0.767 per share, which is at a 1.3% premium to the 30-day volume weighted average price of the stock as on September 20, 2017. The Company has agreed to pay nearly $0.6 million to APEG in cash towards payment of debt. As part of the exchange agreement, the Company will pay APEG any accrued / unpaid interest in cash at the close of the transaction.
Upon the finalization of the agreement, US Energy will only have $0.9 million in debts and APEG will own nearly 49.9% stake in the Company. The exchange agreement was approved by the Company's Board of Directors. The transaction was subject to shareholders' approval and other closing conditions.
US Energy had got into these debts due to the decreasing oil prices in recent years which had resulted in restricted cash flows. In June 2017, US Energy had amended its credit agreement with APEG for the fifth time to extend the maturity date of payment from July 30, 2017, to July 30, 2019. At that time, the Company had indicated that the amendment would pave the way for APEG to become a strategic partner. The Company has also indicated that it would undertake cost-cutting measures including consolidation of its assets to improve its financials.
About US Energy Corp.
Denver, Colorado-based US Energy was founded in 1966 and is a diversified natural resource Company with primary interests in oil, gas and molybdenum. The Company is focused on the lease acquisition and development of oil and gas producing properties in the continental United States. At present, the Company's business is focused in the Williston Basin of North Dakota and South Texas.
Last Close Stock Review
On Wednesday, October 11, 2017, the stock closed the trading session at $0.97, declining 5.83% from its previous closing price of $1.03. A total volume of 49.60 thousand shares have exchanged hands. US Energy's stock price soared 18.29% in the last one month, 37.24% in the past three months, and 3.19% in the previous six months. The stock is trading at a PE ratio of 69.29 and currently has a market cap of $4.69 million.
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