6,500 BOPD from Aneth Field
Resolute Energy (ticker: REN) announced is shift to a pure-play Delaware Basin company today, selling its Aneth Field assets to Elk Petroleum (ticker: ELK).
The Aneth Field is a large EOR project located in Utah, using CO2 to produce from a conventional reservoir. According to Resolute, the field has 1.5 billion BOE originally in place, and only 31% has been recovered so far. The field has 40 MMBOE of proved reserves, and 59 MMBOE of 2P oil reserves. According to Elk, the field currently is producing 6,500 BOPD and is one of the three biggest CO2 EOR projects in the Rocky Mountains. Additional growth projects may deliver a further 107 MMBBL of recoverable resource.
Source: Elk Petroleum Investor Presentation
Source: Elk Petroleum Investor Presentation
Elk Petroleum will pay Resolute $160 million in cash, with additional considerations of up to $35 million if oil prices exceed certain levels in the next three years. Resolute reports that it will use the proceeds of the sale to pay down its revolving credit facility, which is currently around $135 million.
Elk Petroleum describes itself as “Australia’s only ASX-listed CO2 EOR oil and gas company.” The acquisition will make the company one of the largest oil producers on the ASX, with expected 2018 production of 11,000 BOEPD. Elk plans to fund this purchase using several methods. The company will conduct a $22 million equity placement, issue $98 million in debt and $55 million in preferred equity.
This is the second major acquisition by Elk this year, as the company acquired Freeport-McMoRan’s (ticker: FCX) interest in several gas fields in January.
Resolute has owned interest in Aneth since 2004
This marks the final step in a major shift for Resolute, which has transitioned into a pure-play Permian operator. Resolute originally bought interest in Aneth in 2004, and has been the operator for the past 12 years. The company will now be able to focus on its Delaware Basin properties, where it is targeting multiple benches of the Wolfcamp. The company currently plans a two or three rig program on its acreage in 2018, drilling 30-45 wells.
Elk Petroleum Managing Director Bradley Lingo commented on the purchase, saying ““The Aneth Oil Field is one of the most significant EOR projects in the US, underpinned by a high-quality and established operating and management team. The field is highly complementary to Elk and represents an attractive opportunity for Elk to transform into one of the ASX’s leading oil companies and operators by reserves, production and cash flow… We have undertaken extensive due diligence, built a strong business case and established a seamless plan for integration, including the adoption of over 90 highly experienced Resolute staff across all areas of Aneth field operation and head office management.”
