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North American Petroleum (ISDX:NAPP), a company focussed on developing its interests in proven US onshore oil and gas formations, is pleased to announce it has acquired a 30% working interest in the Mathis Unit which covers 960 gross acres in Osage County, Oklahoma and is adjacent to two horizontal wells currently producing from the Mississippi Lime formation, in which NAP already holds a 28.7% working interest.
The acquisition increases the value of NAP’s proven reserves by 20% to US$21.05m and is in line with the company’s strategy to rapidly build net production and reserves by acquiring and developing leases in liquids rich hydrocarbon plays.
– 30%/23% working/net revenue interest acquired in 960 gross acre Mathis Unit which is operated by AIM listed Northcote Energy plc – directly offsets the Steele and Steinberger wells producing from the Mississippi Lime in which NAP has an interest
– Acquisition includes eight producing vertical wells that hold the leases by production and 3-D seismic data covering a portion of the lease
– High impact development potential: two proved undeveloped (P1) horizontal drilling locations targeting the Mississippi Lime formation with combined P1 reserves of 96,070 MBO and condensate and 0.817Bcf natural gas net to NAP with a PV10 of US$4.29m (based on Competent Person’s Report)
– First well location with gross 200,000 barrels of oil and 1.7Bcf of natural gas expected to spud in January 2014
– US$120,000 cost of acquisition equates to US$1.93 per P1 barrel of reserves – compares favourably to average price for similar US onshore transactions
– Net leasehold position increased by 288 to 1,067 mineral acres in the Mississippi Lime formation, Oklahoma
NAP’s Managing Director Stefan Olivier said, “The Mathis acquisition matches our investment criteria: the acreage is located in an area where there is already production from the Mississippi Lime formation; it offers high impact near term development potential; and we acquired it at a competitive price per barrel of proven reserves. Since our IPO in March 2013, we have secured over 1,000 net mineral acres in the Mississippi Lime with over 200 potential drilling locations and from a standing start we have grown the value of our P1 reserves to over US$21m, which easily outstrips our current market valuation. As a result of participating in new drilling on our acreage alongside established operators such as Devon Energy, as well as our on-going leasing activity in producing US onshore formations, we expect to significantly add to our asset backing in terms of proven reserves and in the process build further value for shareholders.”
NAP is also acquiring a 30% working interest and 23% NRI in the Mathis Unit in Osage County, Oklahoma from AIM listed Northcote Energy (NCT). Mathis covers an area of 960 gross acres, 288 of which are attributable to the Company. Eight vertical wells exist on the property, the production of which directly offsets two producing wells, Steele and Steinberger, on the Horizon Project in which NAP holds a 28.7%/21.65% working/net revenue interest. Significantly, all of the leases are part of a “unit” and as such production on any part of the unit holds the entire lease position indefinitely.
The Mathis unit holds significant development potential through the workover of the existing wellbores. In addition, 3-D seismic data exists over a portion of the Mathis lease from which two horizontal well locations have already been identified, both of which have been designated as proved undeveloped (P1) locations by Moyes & Co. The first new well, which is expected to spud in January 2014, has been assigned gross 200,000 barrels of oil and 1.7Bcf of natural gas. Combined with the second proven undeveloped location, reserves total 328,000 barrels of oil and 2.79Bcf of natural gas with a PV-10% of US$4.29m which is attributable to NAP net of expected drilling and completion costs.
The purchase price of US$120,000 equates to a cost per barrel of P1 reserves of US$1.93 per barrel of oil equivalent which compares favourably to similar transactions.
