PostRock Energy Closes Two Acquisitions In Oklahoma

Transaction Type
Sellers
Buyers
Announce Date
Post Date
Close Date
Estimated Price
4MM
Description

Acquired 22,000 net acres in Pottawatomie, Cleveland and Mclain counties and 50% WI in 110 operated acres in Seminole County.

PostRock Energy Corp. (Nasdaq: PSTR) closed two acquisitions on Nov. 1 in Oklahoma for some $4.2 million, the company announced Nov. 4.

The first was the acquisition of 22,000 net acres of leasehold in Pottawatomie, Cleveland and McClain counties in central Oklahoma. PostRock paid $3.4 million of cash and issued some 4.5 million shares of its common stock as consideration.

In the second transaction, PostRock acquired a 50% working interest in 110 operated acres and three producing wells from one of its working interest partners in Seminole County, Okla. PostRock now owns a 100% working interest in the properties. Currently, production from the three wells is 20 barrels of oil per day. PostRock paid $750,000 of cash as consideration. PostRock estimates that the net proved reserves acquired total 110,000 barrels of oil, of which some 40% is classified developed. On that basis, acquisition cost equates to $7 per barrel of proved reserves.

"As previously announced, the acquisition of properties in Pottawatomie, Cleveland and McClain counties is an important step in our effort to add oil reserves and development opportunities in central Oklahoma. The working interest acquisition in Seminole County increases our working ownership from 50% to 100% in three producing wells on 110 acres, all held by production. We expect to begin development workovers on these wells in November. Development workovers on wells in the Seminole County field this year have cost approximately $325,000 with payouts forecast to average approximately one year and rates of return forecast to average more than 100%. Additionally, these properties include one Hunton horizontal PUD and at least one possible Woodford horizontal well," Terry W. Carter, president and CEO, said in the release.

PostRock Energy Corp. is an independent energy company engaged in the acquisition, exploration, development, production, and gathering of crude oil and natural gas. The company is headquartered in Oklahoma City.