Joint development venture will develop San Andres play
Yuma Energy (ticker: YUMA) announced entry into the Permian Basin Wednesday, and also released fourth quarter results and reserves.
Yuma entered into a joint development agreement regarding 33,280 acres with two private companies to develop the San Andres play in the Permian. Yuma acquired 1,985 net acres in the area and intends to spud its first joint venture horizontal well this year. Additional acreage in the joint development area will also be acquired this year, the company said.
Source: Yuma Energy
Commenting on the move, Sam L. Banks, Yuma President and CEO said, “We are excited about our initial entry into the Permian basin and look forward to expanding our position in the San Andres horizontal play.
“Together with our recent merger with Davis Petroleum Acquisition Corp., we are poised to take advantage of the opportunities 2017 will bring. The merger with Davis has increased our liquidity and improved our financial position, while at the same time nearly doubling our production and increasing our reserves. The transaction allows us to take advantage of low-risk and low-cost growth opportunities from our existing inventory, continue the development and expansion of our San Andres play, and actively pursue acquisitions and mergers.”
The company reports several significant highlights in Q4 2016:
- The merger of Yuma and privately held Davis Petroleum Acquisition Corp was completed on October 26, 2016 in an all-stock transaction, with Davis becoming a wholly owned subsidiary of Yuma.
- The Company entered into a credit agreement providing for a $75.0 million 3-year revolving credit facility on October 26, 2016 in connection with the merger. The initial borrowing base of the credit facility was $44.0 million, which was extended by the redetermination on January 1, 2017. The Company has current borrowings under the credit facility of $39.5 million.
- Net average production was 2,445 Boe/d for the fourth quarter of 2016 (including approximately two months of Davis and Yuma combined), a 59.5 percent increase over the fourth quarter of 2015.
- Lease operating expenses and workover costs were $2,252,228 for the fourth quarter of 2016 (including approximately two months of Davis and Yuma combined), a 7.3 percent reduction when compared to the fourth quarter 2015.
- Commodity derivatives were entered into during the fourth quarter which brought the Company’s total hedge position to 2,629,799 MMBtu of natural gas at an average price of $3.11 per MMBtu and 258,804 barrels of oil at an average price of $55.63 per Bbl for calendar year 2017; 1,451,734 MMBtu of natural gas at an average price of $3.00 per MMBtu and 195,152 barrels of oil at an average price of $53.17 per Bbl for calendar year 2018; and 156,320 barrels of oil at an average price of $53.77 per Bbl for calendar year 2019.
Operational Highlights for 2016
In 2016, Yuma significantly reduced capital spending and drilled and completed one successful well, the EE Broussard #1 in the Cameron Canal Field in Cameron Parish, Louisiana. In addition, the company also focused on reducing controllable costs to offset lower commodity prices and increasing margins. Lease operating expenses and workover costs during the fourth quarter of 2016 were approximately $2.3 million (including approximately two months of Davis and Yuma combined), a 7.3 percent ($0.2 million) reduction compared to the fourth quarter of 2015. For the full year of 2016, lease operating expenses and workover costs were approximately $5.6 million, or 27.2 percent ($2.1 million) lower than in 2015. Yuma reports that it has reduced total operating expenses quarter after quarter in 2016 and will continue to seek ways to optimize operations to meet the current price environment.
Net production averaged 2,445 Boe/d during the fourth quarter of 2016 (including approximately two months of Davis and Yuma combined), which was 59.5 percent (912 Boe/d) higher than the same quarter in the prior year. Net average production for the full year of 2016 was 1,812 Boe/d, down 13.0 percent (277 Boe/d) when compared to the full year of 2015, primarily due to the higher production levels experienced at Lac Blanc, El Halcón, and Chalktown during the first two quarters of 2015.
