PICO Holdings, Inc. Announces the Sale of a Majority of Its Oil & Gas Assets
October 10 2016 - 5:00AM
PICO Holdings, Inc. (NASDAQ:PICO) announced today that on October
7, 2016, its Mendell Energy group of companies closed on the sale
of a majority of their oil and gas assets, consisting of certain
oil and gas lease interests and producing wells in the Wattenberg
Field, Colorado, for gross proceeds of $10.2 million. The effective
date of the transaction was October 1, 2016. The purchase and sale
agreement for these oil and gas assets provides for a Company
guarantee to the buyer for $1 million for any indemnification
claims made by the buyer within one year of the sale. In addition,
there is an escrow holdback of approximately $587,000 for lease
title defect issues that the Company has the right to cure within
one year of the sale.
The sale transaction will be recorded in the
Company’s consolidated statement of operations in the fourth
quarter of 2016 which is estimated to result in a gain before
income taxes of approximately $8.6 million.
PICO’s President and Chief Executive Officer,
John Hart commented:
“Mendell Energy's management team has done an
excellent job of maintaining and enhancing the value of our
petroleum assets. They also conducted a robust auction and contract
process, which allowed us to realize a positive outcome.”
About PICO Holdings, Inc.
PICO Holdings is a diversified holding
company. Currently, we believe the highest potential return
to shareholders is from a return of capital to shareholders.
As we monetize assets, rather than reinvest the proceeds, we intend
to return the capital derived therefrom, less any working capital
requirements, back to shareholders through a stock repurchase
program or by other means such as special dividends taking into
effect liquidity requirements, debt covenants and any other
contractual and legal restrictions that may exist at the time.
As of September 30, 2016, our two major
investments were:
- Vidler Water Company, Inc., a water resource development
business; and
- a 56.9% interest in UCP, Inc. (NYSE: UCP), a publicly-traded
homebuilder and land developer in markets located in California,
the Puget Sound area of Washington State, North Carolina, South
Carolina and Tennessee.
OTHER INFORMATION
At September 30, 2016, PICO Holdings, Inc.
had a market capitalization of $272 million, and 23,069,381 shares
outstanding.
The PICO Holdings, Inc. logo is available at:
http://www.globenewswire.com/newsroom/prs/?pkgid=5044
CAUTIONARY NOTE REGARDING
FORWARD-LOOKING STATEMENTS
Statements in this press release that are not
historical, including statements regarding our business objectives,
the gain to be realized as a result of the sale of the oil and gas
assets, and our ability to monetize assets and return capital to
shareholders through stock repurchases or through other means, are
forward-looking statements based on current expectations and
assumptions that are subject to risks and uncertainties.
In addition, a number of other factors may cause
results to differ materially from our expectations, such as: any
slow down or downturn in the housing recovery or in the real estate
markets in which UCP and Vidler operate; fluctuations in the prices
of water and water rights; physical, governmental and legal
restrictions on water and water rights; a downturn in some sectors
of the stock market; general economic conditions; prolonged
weakness in the overall U.S. and global economies; the performance
of the businesses; the continued service and availability of key
management personnel; and potential capital requirements and
financing alternatives.
For further information regarding risks and
uncertainties associated with our business, please refer to the
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations” and “Risk Factors” sections of our SEC
filings, including our Annual Report on Form 10-K and our Quarterly
Reports on Form 10-Q, copies of which may be obtained by contacting
us at (858) 456-6022 or at
http://investors.picoholdings.com.
We undertake no obligation to (and we expressly
disclaim any obligation to) update our forward-looking statements,
whether as a result of new information, subsequent events, or
otherwise, in order to reflect any event or circumstance which may
arise after the date of this press release, except as may otherwise
be required by law. Readers are urged not to place undue
reliance on these forward-looking statements, which speak only as
of the date of this press release.
CONTACT:
Financial Profiles, Inc.
Jim Barry
310-478-2700
jbarry@finprofiles.com
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