Mr. Richard Clark reports
EAGLE ENERGY TRUST ANNOUNCES CLOSING OF SALE OF PERMIAN PROPERTIES
Eagle Energy Trust's United States operating subsidiary has closed the sale of its entire working interest in its oil and natural gas properties in the Permian basin, located near Midland, Tex., to an undisclosed buyer for cash consideration of $140-million (U.S.) before closing adjustments.
The disposition means Eagle's go-forward corporate product mix moves from about 82 per cent oil to 96 per cent oil, which is expected to increase its average netback per barrel of oil equivalent. The $140-million (U.S.) sale proceeds (before transaction costs and closing adjustments) exceed the proved plus probable reserve value (discounted at 10 per cent) of the Permian basin properties in Eagle's independent Dec. 31, 2013, reserves report by $42.7-million (U.S.). Based on the trust units currently outstanding, this excess equates approximately to $1.34 per unit above Eagle's previously stated reserve value.
Eagle's working interest production as of July 1, 2014, excluding the Permian basin assets, was approximately 1,940 barrels of oil equivalent per day. The trust intends to use the net proceeds from the disposition to fully retire its outstanding advances under its existing credit facility, and expects to have approximately $55-million (U.S.) of cash remaining (before closing adjustments). In addition, Eagle's borrowing base after giving effect to the disposition has been redetermined to $55-million (U.S.), which also constitutes its semi-annual Sept. 1, 2014, borrowing base. Eagle intends to redeploy the capital to acquire other assets expeditiously with a view to significantly improve its sustainability and lower its payout ratio.
We seek Safe Harbor.
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