![](/sites/default/files/styles/hart_news_article_image_640/public/image/2019/02/paradox.jpg?itok=AxvBkyWT)
Resolute Energy will sell its Aneth Field in Utah for as much as $195 million based on potential payouts of $35 million tied to WTI prices. (Source: Hart Energy)
Resolute Energy Corp. (NYSE: REN) entered a definitive agreement to sell its interests in the Aneth Field in the Paradox Basin of Southeastern Utah, the company said Sept. 14.
The sale of its EOR assets for $160 million cash and up to $35 million in contingency payments should improve the company’s balance sheet as it transitions into a Delaware Basin pure play E&P, Capital One Securities analyst Richard Tullis said in a Sept. 15 report. Resolute’s subsidiary in the Aneth will be sold to an affiliate of Australia’s Elk Petroleum Ltd. (ASX: ELK).
Elk Petroleum focuses on mature oil fields using EOR methods, including CO2, in plays in the U.S. and Australia. The company’s affiliate will pay an additional $35 million to Resolute if WTI rise above $52.50 to $60 per barrel in the three years after closing.
Capital One valued Resolute’s assets at about $100 million. The additional funds should increase the amount of money spent on operations to produce a barrel of oil equivalent (boe). Resolute said it intends to repay its credit facility with the proceeds.
Resolute’s lease operating expenses (LOE) in the Delaware are $4.87 per boe, Resolute CEO Rick Betz said.
“This sale is the final step in our previously announced strategy to transform Resolute into a pure-play Delaware Basin company,” he said in a news release. “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,” he said. Second-quarter 2017 expenses, which included the Aneth, were $8.95 per boe.
Proceeds from the transaction are expected to repay the outstanding balance of the company’s revolving credit facility, which will be an estimated $130 million to $135 million by Sept. 30.
Resolute’s Aneth-dedicated staff will transition to Elk Petroleum, annually reducing Resolute’s general and administrative overhead by about $6 million as well as $3 million in stock-based compensation.
Seaport Global Securities analysts said the sale did not affect its estimates, which already reflected 5,900 boe/d of sold production and anticipated cost structure improvements. “Unit LOE costs drop 46% versus second-quarter figures, and $9 million of annual G&A [is] knocked off,” the analyst said in a Sept. 15 report.
Under the contingency agreement, Elk’s affiliate will pay Resolute:
- $40,000 per day for the 12 months after closing in which the WTI spot oil price exceeds $52.50 (about $10 million);
- $50,000 per day in the 12 months following the first anniversary of closing that the oil price exceeds $55 (about $10 million); and
- $60,000 for each day in the 12 months following the second anniversary of closing that WTI exceeds $60 (roughly $15 million).
The transaction is expected to close in late October and has an effective date of Oct. 1.
Petrie Partners, LLC and Barclays Capital Inc. acted as financial advisers to Resolute on the Aneth Field sale transaction. Resolute was represented by Arnold & Porter Kaye Scholer LLP.
Darren Barbee can be reached at dbarbee@hartenergy.com.
Recommended Reading
Earthstone’s Anderson Relaunches, Seeks Conventional
2024-05-24 - The new E&P PetroPeak Energy will also take a look at unconventional property in the Eagle Ford and Austin Chalk.
ISS, Glass Lewis Push Crescent, SilverBow Shareholders to Vote for Merger
2024-07-19 - Proxy Advisory firms Institutional Shareholder Services and Glass Lewis also recommend that Crescent Energy shareholders vote for the approval of the issuance of shares on Crescent Class A common stock.
Liberty Energy Warns of ‘Softer’ E&P Activity to Finish 2024
2024-07-18 - Service company Liberty Energy Inc. upped its EBITDA 12% quarter over quarter but sees signs of slowing drilling activity and completions in the second half of the year.
Offshore Guyana: ‘The Place to Spend Money’
2024-07-09 - Exxon Mobil, Hess and CNOOC are prepared to pump as much as $105 billion into the vast potential of the Stabroek Block.
Energy Capital Partners Raises $6.7B, Buys Atlantica
2024-05-29 - The New Jersey-headquartered Energy Capital Partners said its ECP V (Fund V) secured capital commitments of $4.4 billion plus an additional $2.3 billion of co-investment capital; the private equity firm also announced a $2.6 billion take-private of Atlantica Sustainable Infrastructure.