DENVER, June 4, 2014 /PRNewswire/ -- Escalera
Resources Co. (NASDAQ: ESCR) today announced that it has
entered into a letter agreement (the "Letter Agreement') to jointly
initiate the development, construction and operations of a
gas-to-liquids ("GTL") plant to be located in Cheyenne, Wyoming (the "GTL Plant"). Escalera
Resources Co. ("Escalera" or the "Company") and Wyoming GTL, LLC
("WYGTL") will jointly own Escalera GTL, LLC ("EGTL"), through
which the initial phase of the GTL Plant will be executed. Under
the Letter Agreement, WYGTL will assign all development and
engineering plans, contracts, rights, technical relationships,
among other rights (collectively, the "Rights") to EGTL, and the
Company will fund up to $2 million to
EGTL, subject to Board approval. These funds will be used for
feasibility studies and completion of the initial engineering and
development plans for the GTL Plant.
The Letter Agreement will terminate within 180 days (or on
November 26, 2014) if a definitive
agreement between the Company and WYGTL has not been completed. In
the event a definitive agreement is not executed within the
required period, WYGTL will reimburse the Company for any portion
of the $2 million funded to EGTL, and
EGTL will assign all Rights to WYGTL. Under the Letter Agreement,
WYGTL will own 90% of EGTL, with Escalera owning the remaining
10%.
For its participation in EGTL, the Company has the right to
supply up to 75% of the natural gas feedstock for the GTL Plant
once it is operational. Based on WYGTL's plans for the GTL Plant,
the estimated amount of gas to be supplied by Escalera would be up
to approximately 35-38 Bcf annually. Additionally, the Company will
participate in the net margin generated from the conversion of the
gas it supplies to the GTL Plant in return for entering into a
long-term gas supply contract. The Company intends to provide the
natural gas supply to the GTL Plant from its current producing
properties, and the future acquisition and development of producing
properties.
The Letter Agreement also provides for initial ownership
percentages for the Company and WYGTL for any other future GTL
plants to be developed and constructed by EGTL. The Company's
initial ownership percentage in any other future GTL plants will
vary based on its involvement in initiating such project and will
range between 5% and 55%. The Company will have the right to supply
up to 75% of the natural gas feedstock for all future plants and
will participate in the net margin generated from the conversion of
its supplied natural gas feedstock.
Management Comments
Mr. Charles Chambers, President,
CEO and Chairman of the Board of Escalera said, "This is an
important step for Escalera as we move to implement the new
business strategy announced earlier this year. Escalera will
continue to be focused on natural gas and on creating value for our
shareholders. The technology which will be used in this venture is
proven and already in use in several very large scale operations in
other parts of the world. It converts natural gas to diesel fuel
that is much cleaner and more environmentally friendly than diesel
derived from crude oil.
Mr. Chambers went on to say, "The project uses commercially
proven and economically efficient technology, is backed by
world-class partners with world-class expertise and it is scalable
to meet regional fuel needs." The GTL Plant will be designed to
produce approximately 15,000 barrels of fuel per day using 135 MMcf
of natural gas per day.
Mr. Gene Humphrey, President of
WYGTL, said, "I've been involved in studying alternative fossil
fuel opportunities since the 70's. The energy industry's
importance to the global economies and the need to have
environmental solutions for energy fueled growth has evolved to a
point that there are new exciting value creation processes around
natural gas. The venture with Escalera is an important "first
mover" opportunity for the country."
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., and is
seeking to own and operate similar assets internationally. These
efforts are accomplished through three operating groups: 1)
Escalera owns and operates various domestic natural gas producing
assets, 2) Escalera transports natural gas, currently through its
wholly owned subsidiary, Eastern Washakie Midstream LLC, which owns
and operates a midstream pipeline in Wyoming, and 3) Escalera Resources
International Co. LLC seeks to own and operate both upstream
E&P assets and midstream assets located internationally, with a
current focus on Eastern
Europe.
All statements included in this release relating to future
plans, projects, events or conditions and all other statements
other than statements of historical fact included in this release,
are forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements in this press release relate to, among other things, the
planned development, construction and operation of the GTL Plant
and Escalera's participation in supplying the GTL Plant with
natural gas. No assurances can be given that these statements will
prove to be accurate. A number of risks and uncertainties
could cause actual results to differ materially from these
statements, including, without limitation, decreases in prices for
natural gas and crude oil, unexpected decreases in gas and oil
production, the timeliness, costs and results of development and
exploration activities, unanticipated delays and costs resulting
from regulatory compliance, and other risk factors described from
time to time in the Company's Forms 10-K and 10-Q and other reports
filed with the Securities and Exchange Commission. Escalera
undertakes no obligation to publicly update these forward-looking
statements, whether as a result of new information, future events
or
otherwise.
Company Contact:
John Campbell, IR
(303) 794-8445
www.escaleraresources.com
SOURCE Escalera Resources Co.