Samson Oil & Gas Deals Williston Assets To Eagle Energy Partners

[Editor's note: This story was updated at 9:05 a.m. CST June 27.]

Samson Oil & Gas Ltd. has found a new buyer for its Williston Basin assets after a previously terminated deal left the Australian company financially stressed.

Samson, which also has a Denver office, said in filings on June 20 it reached an agreement to sell the Williston assets known as the Foreman Butte Project to Eagle Energy Partners I LLC for $40 million. The Foreman Butte position located in North Dakota and Montana comprises substantially all of Samson’s assets, according to company filings.

The transaction will allow Samson to retire all of its debt, meet all of its other liabilities and retain a cash balance of roughly $6.7 million, the company later said in a June 26 press release. In addition, Samson said it will also retain a nonoperated 15% working interest within the Foreman Butte assets in the Home Run Field, where the company expects a bulk of the identified upside of the project is located.

Samson said in January it had a deal to sell the Foreman Butte assets for $41.5 million with proceeds earmarked for repaying all its liabilities. However, by Feb. 1, Samson announced the buyer, Firehawk Oil and Gas LLC, had terminated the agreement after indicating that it wanted to proceed but was unable to complete financing for the transaction.

Since then, Samson has struggled to find the funds necessary to repay its lenders or develop the Foreman Butte position so it continued to refocus its efforts on seeking an outright sale of its assets.

As a result, Samson entered an agreement with Eagle Energy Partners on June 12 for the sale of the Foreman Butte position, according to filings with the U.S. Securities and Exchange Commission on June 20.

Eagle Energy Partners is a private E&P based in Minot, N.D., which President Bob Mau formed in 2017. The company is currently acquiring North Dakota-based assets to develop them often through employing proven EOR methods and new technologies, according to its website.

In May, Eagle Energy Partners pledged to provide at least $3 million to co-fund a new project aimed at revitalizing North Dakota's conventional oil fields. The project will target oil wells in existing oil fields where water has been injected into the wells to increase pressure and stimulate oil production, a process known as waterflooding.

Eagle Energy Partners will partner with the Energy and Environmental Research Center, a high-tech, nonprofit branch of the University of North Dakota, to develop best practices for transitioning these waterflooded wells to allow for EOR through CO₂ injection, creating a pathway for revitalizing the numerous legacy fields in the Tyler and Madison formations.

The total cost of the project is expected to be more than $6 million supported by a $3 million oil and gas research program grant approved in May by the North Dakota Industrial Commission (NDIC).

“Millions of barrels of oil remain locked away within the state’s conventional oil fields. Those fields, many of which were established decades ago, are prime candidates for enhanced oil recovery with newly available technology including underground injection of CO_²,” the NDIC said in a joint statement on May 24. “This project could be an opportunity for our coal-fired power plants and other CO₂ providers in North Dakota and beyond.”

Samson acquired the Foreman Butte position, also known as the Home Run Field, in March 2016 for $16 million. The assets included producing oil and gas wells, shut-in wells and associated facilities located in the Madison and Ratcliffe formations across McKenzie and Williams counties, N.D., and Richland, Roosevelt and Sheridan counties, Mont.

In 2016, Samson reported holding 53,035 net acres in the Foreman Butte with an average operated working interest of 87% and opportunities within the Ratcliffe and Nesson formations.

Samson said it previously identified 26 well locations within the Ratcliffe Formation that could be drilled out of existing wellbores and 10 vertical wells proven to be productive from the Nesson Formation.

Eagle advised Samson that it intends to develop the identified well locations, including nine wells in the balance of 2018 and another nine wells in 2019, according to the Samson press release.

Samson said it expects to close the transaction five days after the company’s shareholders approve the sale, currently planned for Aug. 6. The transaction will have a Jan. 1 effective date.

The agreement also contains certain termination rights for both Samson and Eagle Energy Partners, including the right of either party to terminate the agreement if the aggregate reduction to the purchase price as a result of environmental and title defects exceeds 20% of the purchase price.

Emily Patsy can be reached at epatsy@hartenergy.com.