Resolute Energy Corporation Announces Agreement to Sell Aneth Field for Up to $195 Million Including $160 Million Cash Plus U...
September 14 2017 - 7:17PM
Resolute Energy Corporation (“Resolute” or the “Company”)
(NYSE:REN) announced today that it has entered into a definitive
agreement to sell its subsidiary which holds interests in Aneth
Field in the Paradox Basin of Southeastern Utah for total potential
consideration of $195 million to an affiliate of Elk Petroleum
Limited (ASX:ELK). Under the terms of the agreement, Resolute will
receive cash consideration of $160 million at closing and
additional cash consideration of up to $35 million if oil prices
exceed certain levels in the next three years.
Rick Betz, Resolute’s Chief Executive Officer, said: “This sale
is the final step in our previously announced strategy to transform
Resolute into a pure-play Delaware Basin company. Closing
this transaction will significantly improve our cost structure,
strengthen our balance sheet and position the Company to accelerate
the development of our prolific Delaware Basin property and
continue our strong growth profile.
“As previously disclosed, second quarter lease operating expense
for the Permian Basin was $4.87 per Boe which will approximate our
Company LOE after completion of the transaction. Proceeds from the
transaction are expected to repay the outstanding balance under our
revolving credit facility, which we currently estimate will be
approximately $130 million to $135 million at September 30, and
significantly reduce our year-end leverage ratio. The expected
transition of Resolute’s Aneth-dedicated staff to Elk, an
established Rocky Mountain EOR producer, will allow Resolute to
reduce future cash general and administrative expenses by
approximately $6 million (before changes in overhead
reimbursements) and stock based compensation by approximately $3
million annually.”
Resolute’s current 2017 production guidance is 24,000 to 28,000
Boe per day. Assuming the closing of the divestiture occurs by
November 1, the Company’s 2017 production will be reduced by
approximately 1,000 Boe per day. As previously disclosed, actual
July production was 23,600 Boe per day in the Permian Basin and
29,500 Boe per day for the Company as a whole.
Under the terms of the definitive agreement, the buyer will fund
a performance deposit of $10 million creditable against the
purchase price. Pursuant to the contingent consideration provisions
of the agreement, the buyer will pay Resolute $40,000 for each day
in the twelve months after closing that the WTI spot oil price
exceeds $52.50 per barrel (up to $10 million), $50,000 for each day
in the twelve months following the first anniversary of closing
that the oil price exceeds $55.00 per barrel (up to $10 million)
and $60,000 for each day in the twelve months following the second
anniversary of closing that the oil price exceeds $60.00 per barrel
(up to $15 million). The transaction, which is expected to close in
late October, has an effective date of October 1, 2017, and is
subject to customary covenants, closing conditions and purchase
price adjustments.
Petrie Partners, LLC and Barclays Capital Inc. acted as
financial advisors to Resolute on the Aneth Field sale transaction.
Resolute was represented by Arnold & Porter Kaye Scholer
LLP.
Cautionary Statements
This press release includes “forward-looking statements” within
the meaning of the safe harbor provisions of the United States
Private Securities Litigation Reform Act of 1995. Words such as
“expect,” “estimate,” “project,” “budget,” “forecast,”
“anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,”
“poised,” “believes,” “predicts,” “potential,” “continue,” and
similar expressions are intended to identify such forward-looking
statements. Such forward looking statements include statements
regarding the anticipated closing of the disposition of Aneth
Field, potential proceeds and the anticipated use thereof, future
lease operating and general and administrative expenses, future
debt balance, 2017 average production and future development and
production growth rates. Forward-looking statements in this
press release include matters that involve known and unknown risks,
uncertainties and other factors that may cause actual results,
levels of activity, performance or achievements to differ
materially from results expressed or implied by this press release.
Such risk factors include, among others: commodity prices; the
volatility of oil and gas prices including the price realized by
Resolute for the oil and gas it sells; inaccuracy in reserve
estimates and expected production rates; the discovery, estimation,
development and replacement by Resolute of oil and gas reserves and
the risks associated with the potential writedown of reserves; the
future cash flow, liquidity and financial position of Resolute;
Resolute’s level of indebtedness and our ability to fulfill our
obligations under the senior notes, our credit facility, and any
additional indebtedness that we may incur; potential borrowing base
reductions under our revolving credit facility; the success of the
business and financial strategy, hedging strategies and plans of
Resolute; the amount, nature and timing of capital expenditures of
Resolute, including future development costs; the availability of
additional capital and financing, including the capital needed to
pursue our acquisition strategy and our drilling and development
plans for our properties, on terms acceptable to us or at all;
uncertainty surrounding timing of identifying drilling locations
and necessary capital to drill such locations; the potential for
down-spacing, infill or multi-lateral drilling in the Permian Basin
or obstacles thereto; the timing of issuance of permits and rights
of way; the timing and amount of future production of oil and gas;
availability of drilling, completion and production personnel,
supplies and equipment; the completion and success of exploratory
drilling on our properties; potential delays in the completion,
commissioning and optimization schedule of Resolute’s facilities
construction projects or any potential breakdown of such
facilities; operating costs and other expenses of Resolute; the
success of prospect development and property acquisition of
Resolute; timing of installation of gathering and processing
infrastructure in new areas of development, including Resolute’s
dependence on third parties for such items; the success of Resolute
in marketing oil and gas; competition in the oil and gas industry;
the impact of weather and the occurrence of disasters, such as
fires, floods and other events and natural disasters; environmental
liabilities; potential power supply interruptions, limitations or
delays; operational problems or uninsured or underinsured losses
affecting Resolute’s operations or financial results; adverse
changes in government regulation and taxation of the oil and gas
industry, including the potential for increased regulation of
underground injection, fracing operations and venting/flaring;
potential climate related change regulations; risks and
uncertainties associated with horizontal drilling and completion
techniques; the availability of water and our ability to adequately
treat and dispose of water during and after drilling and completing
wells; changes in derivatives regulation; developments in
oil-producing and gas- producing countries; Resolute’s relationship
with the Navajo Nation and the local communities in the areas in
which Resolute operates; and cyber security risks. Actual results
may differ materially from those contained in the forward looking
statements in this press release. Resolute undertakes no obligation
and does not intend to update these forward-looking statements to
reflect events or circumstances occurring after the date of this
press release. You are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date
of this press release. You are encouraged to review “Cautionary
Note Regarding Forward Looking Statements” and “Item 1A - Risk
Factors” and all other disclosures appearing in the Company’s Form
10-K for the year ended December 31, 2016, and subsequent filings
with the Securities and Exchange Commission for further information
on risks and uncertainties that could affect the Company’s
businesses, financial condition and results of operations. All
forward-looking statements are qualified in their entirety by this
cautionary statement.
About Resolute Energy Corporation
Resolute is an independent oil and gas company focused on the
acquisition and development of unconventional oil and gas
properties in the Delaware Basin portion of the Permian Basin of
west Texas. For more information, visit www.resoluteenergy.com. The
Company routinely posts important information about the Company
under the Investor Relations section of its website. The Company's
common stock is traded on the NYSE under the ticker symbol
"REN."
Contact:HB JuenglingVice President
- Investor RelationsResolute Energy Corporation303-534-4600,
extension 1555hbjuengling@resoluteenergy.com
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