Samson Oil & Gas Limited (ticker: SSN) has sold its interest in the North Stockyard field for $15 million. The transaction closed on Friday after Samson received the balance of $13.95 million of the purchase price.
Samson Oil & Gas has closed the sale of its North Stockyard property interest.
In an announcement Samson said $11.5 million of the sales proceeds will be used to reduce the outstanding amount on its debt facility to $19 million. Samson will use the balance of the proceeds for working capital and to reduce its current hedge positions in line with its post-sale production.
The company said it would focus on development of its recently acquired Foreman Butte property which provides the opportunity to grow its reserve base.
Samson Oil & Gas’ Foreman Butte field assets
Since the acquisition of Foreman Butte, Samson has already grown the asset from a Proved Developed Producing (PDP) reserve with an NPV10 of $22 million to a NPV10 of $45 million as at June 30th which has more than replaced the PDP reserve value of North Stockyard of $15 million.
As a result of the closing and the reduction of outstanding balance Samson expects that it should be in a position early in 2017 to negotiate and execute a revised debt facility with Mutual of Omaha Bank. This new facility will give Samson ample liquidity to further develop the Foreman Butte project or to take advantage of further acquisitions.
Foreman Butte field is Samson’s focus
The next round of activity in Foreman Butte will take two directions. One will be to utilize a fresh water cleanout workover technique that has proved successful in the Evans 1-10 well which has demonstrated a doubling of fluid production and secondly to optimize the pumps across the project.
A field wide fluid level survey has revealed that the majority of our producing wells are not being pumped to the reservoir capacity. Therefore pump change outs, stroke length, and stroke rate improvements or a combination thereof will be used to help these wells pump at an optimum rate. While relatively inexpensive, these pump enhancements should boost both production and reserves in the near term, the company said.
Samson is due to file its ASX quarterly report and Appendix 5b with the Australian Securities Exchange on Monday, October 31, 2016, and its SEC 10Q on November 14, 2016.
