U.S. Energy Corp. To Acquire Interest in Wattenberg Development Program
July 06 2016 - 5:22PM
U.S. Energy Corp. (Nasdaq:USEG), a Wyoming corporation (the
“Company”), has entered into a non-binding Letter of Intent with
IronHorse Resources LLC. pursuant to which the Company expects to
acquire a 40% interest in IronHorse Resource’s Farmout Agreement to
participate in developing three core areas in the DJ Basin,
Wattenberg Field in Weld County, Colorado.
Under the Participation Agreement, the Company
will obtain working interests averaging 11.6% in 21 horizontal
wells to be drilled in the A, B, and C benches of the Niobrara
formation and the Codell formation.
The DJ Basin is a crude oil and liquids rich
natural gas play located in Northeastern Colorado and Southeastern
Wyoming. The Company believes that the Wattenberg Field of
the DJ Basin offers attractive economics at current strip prices
for oil and gas. The DJ Basin Wattenberg was discovered in
1970 and is one of the 15 largest developments of gas in the
country.
The development program is slated to begin later
this year and drill into mid 2017. The Company’s commitment
will cost approximately $9.6 million for drilling and completing
the wells and is expected to generate revenue of approximately $4.9
million in each of the first two years of the program net to the
Company, at a current price of $47.00/BO and $2.78/MCF and assuming
future strip pricing and differentials. The Company estimates
that it could generate a 43% increase in reserves at a finding and
development cost of $12.18/ BOE, a ROR of 38% and a ROI of
2.4.
The transaction is a continuation of the
transformation of the Company to solely focus on its ongoing oil
and gas business. The Company previously announced a
restructuring of the company by reducing its overhead costs, moving
the corporate headquarters to Denver, Colorado for better access to
financial services and to improve access to oil and gas deal
flow.
David Veltri, CEO and President of the Company
stated, “We are very excited about gaining access to such a great
investment opportunity with experienced DJ Basin companies and
seasoned individuals with IronHorse. U.S. Energy Corp. hopes
to grow its position in the DJ Basin while leveraging this
experience into an operated position in the future. We
continue to look for acquisitions of producing properties,
consolidating our current positions in the Bakken and Eagle Ford
trends in addition to divesting nonstrategic assets.”
About U.S. Energy Corp.
U.S. Energy Corp. is a natural resource
exploration and development company with a primary focus on the
exploration and development of its oil and gas assets. The
Company is headquartered in Denver, Colorado and trades on the
NASDAQ Capital Market under the symbol "USEG".
Disclosure Regarding Forward-Looking
Statement
Safe Harbor for forward-looking statements:
Statements in this release looking forward in time, including
statements regarding the proposed transaction and its expected
benefits to the Company, involve known and unknown risks and
uncertainties, which may cause U.S. Energy Corp.’s actual results
in future periods to be materially different from any future
performance suggested in this release. Such factors may
include, but may not be limited to, a potential inability to enter
into definitive agreements relating to the transaction, close the
transaction, finance future capital expenditures relating to the
properties and achieve the anticipated benefits of the transaction,
changes in the prices received by the Company for oil and natural
gas, regulatory limitations on the Company’s operations, and other
risk factors disclosed in the Company’s filings with the Securities
and Exchange Commission, which are incorporated herein by
reference. The Company does not undertake to update any
forward-looking statement.
For further information, please contact:
David Veltri
CEO and President
U.S. Energy Corp.
1-800-776-9271
david@usnrg.com
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