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A 37.5% working interest
Northcote (LSE:NCT) has agreed to acquire a 37.5% working interest in the Alta Loma Field from Springer Oil & Gas LLC .
The Alta Loma Field is a 444 gross acre (net 167 acres) property located in Galveston county, Texas and is operated by Frankfurt Stock Exchange listed Activa Resources AG (DE:NXI).
Highlights:
· Alta Loma Field currently produces 30.7 BOEPD gross (8.6 BOEPD Net)
· Alta Loma is a 444 gross acre unit held by the production from 1 producing well
· Acquisition of 37.5% working interest (28.125% net revenue interest) from Springer for the following consideration:
o a capital expenditure credit of $50,000; and
o contingent consideration of $100,000 payable on the successful drilling of a new well before 17 July 2015 with initial production in excess of 300 BOEPD
· Northcote expects that the operator will propose a new drill at Alta Loma within 12 months
Commenting on the acquisition, Chief Executive Randall Connally said, “As we build our production base on our core properties, adding high impact upside through the drill bit is a key part of creating the upside potential our shareholders expect. This acquisition gives Northcote such a prospect which offsets the Sunny Ernst 1-2 which has been a very profitable well with cumulative production to date of over 71,900 barrels of oil and 2.2 Bcf of natural gas.”
The Alta Loma project comprises one producing well, Sunny Ernst 1-2, and interests in a salt water disposal well and one additional well bore. Average gross production in July from the unit is 4.37 BOPD and 158 MCFD.
Northcote expects a new well will be drilled at the Sunny Ernst Gas Unit #1-4 within the next 12 months. It will target multiple Frio sands at depths of 9,000 to 14,500 feet. The gross estimated unrisked recoverable reserves from the well are estimated by the operator at over 300,000 barrels of oil and 7.7 billion cubic feet of natural gas.
The consideration to acquire the interest comprises a capital expenditure credit of $50,000, which may be applied at any time towards joint interest billings and capital expenditures related to the vendors retained working interest in the Shoats Creek field, and a contingent consideration of $100,000. The contingent consideration will be payable if Northcote participates in a new drill well at Alta Loma on or before 17 July 2015 and the initial production rate of the well is in excess of 300 BOEPD. The contingent consideration is payable in cash or, at Northcote’s election, in $100,000 of Northcote ordinary shares based on the 30 day average daily VWAP preceding the announcement of the initial production of that well.
