Samson Oil & Gas Advisory
DENVER & PERTH, Australia--(BUSINESS WIRE)-- Samson Oil & Gas Limited (SSN) provides details of a new acquisition and Samsons presentation at the Enercom Conference in Denver.
NEW PROJECT, WILLISTON BASIN
Samson has executed a definitive agreement to participate in the exploration of an area within the Williston Basin. Pursuant to this agreement, Samson will acquire a 25% interest in 23,700 acres (net 5,925 acres) at a price of $266 per acre, with the payment of $1.58 million due at closing following normal due diligence on land title.
The exploration opportunity is a conventional oil project that is adjacent to existing production from Mississippian aged reservoirs. The specific location of the project will remain undisclosed.
Highlights of the transaction include:
- The project covers 23,700 gross (5,925 net) acres prospective for conventional oil targets in the Williston Basin.
- Low entry cost
- Approximately 20 million barrels of oil potential, based on 2-D seismic.
- 3-D seismic data acquisition survey and processing to high-grade new drilling prospects, to be acquired before end of 2012.
- Drilling and completion cost estimated at $1.1 million per vertical well using conventional drilling and completion techniques.
- Very attractive rates of return
Our partner has mapped several leads from 2-D seismic and well control which Samson presently estimates to contain a gross recoverable contingent volume of approximately 20 million barrels of oil. This estimate is based on the average production from analogous fields on trend of similar size having produced between 1 to 6 million barrels of oil each. These leads will be further defined using a 3-D seismic grid to be acquired later this year for which Samson is agreeing to fund 33.34% at an estimated net cost to Samson of $0.94 million.
Leads as used in this context is an industry term, in this case referring to a structural anomaly mapped by existing 2-D seismic that is as yet unproven (from a seismic structural point of view). It is expected that some of these leads will not mature into Prospects for exploratory drilling. However, it is also possible that the 3-D seismic will identify additional prospects outside of what has been currently identified on the existing 2-D seismic. Most of the targets depend on structural closure, some on stratigraphic closure, which will be defined (or not) using 3-D seismic. Prospects as used in this context is a seismically defined feature that has been proven closed by the 3-D seismic.
Following the acquisition, processing and interpretation of this 3-D seismic, Samson will contribute at its working interest of 25% to the subsequent drilling program, which will be operated by one of the other joint venture partners. The wells are expected to cost a gross $1.1 million (drill and complete) given the relatively shallow depth of the targets and that the wells will be drilled vertically. Samsons net revenue interest will be 81% of its working interest.
The relatively low cost of developing these potential fields is a very attractive feature of this project in light of the recent weakness in the price of oil because the development wells in this project can be drilled for $1.1 million, which in turn means that the rate return is very attractive.
The project, whilst being non-operated for Samson, nevertheless plays to the companys exceptional capability in generating prospects from 3-D seismic.
Samson will be presenting at Enercoms Denver Conference on Monday August 13th at 3:35PM MST USA, or Tuesday August 14th at 7:35AM EST Australia. The presentation can be accessed from the link below or from Samsons website.
Samsons Ordinary Shares are traded on the Australian Securities Exchange under the symbol "SSN". Samson's American Depository Shares (ADSs) are traded on the New York Stock Exchange AMEX under the symbol "SSN". Each ADS represents 20 fully paid Ordinary Shares of Samson. Samson has a total of 1,996 million ordinary shares issued and outstanding (including 231 million options exercisable at AUD 1.5 cents), which would be the equivalent of 88.25 million ADSs. Accordingly, based on the NYSE AMEX closing price of US$1.15 per ADS on August 10th, 2012 the Company has a current market capitalization of approximately US$111 million. Correspondingly, based on the ASX closing price of A$0.053 on August 10th, 2012, the Company has a current market capitalization of A$103 million. The options have been valued at their closing price of A$0.040 on August 10th, 2012 and translated to US$ at the current exchange of 1.0519 for purposes of inclusion in the US$ market capitalization calculation.
For and on behalf of the board of
SAMSON OIL & GAS LIMITED
Statements made in this release that are not historical facts may be forward looking statements, including but not limited to statements using words like may, believe, expect, anticipate, should or will.
Actual results may differ materially from those projected in any forward-looking statement. There are a number of important factors that could cause actual results to differ materially from those anticipated or estimated by any forward looking information, including uncertainties inherent in estimating the methods, timing and results of exploration activities. Estimates of contingent recoverable volumes of oil or gas from planned but undrilled exploration projects are inherently uncertain and dependent on various contingencies that are outside the control of Samson.
A description of the risks and uncertainties that are generally attendant to Samson and its industry, as well as other factors that could affect Samsons financial results, are included in the Company's report to the U.S. Securities and Exchange Commission on Form 10-K, which is available at www.sec.gov/edgar/searchedgar/webusers.htm.
Samson Oil & Gas Limited
Terry Barr, CEO, 303-296-3994
970-389-5047 (US cell)
Source: Samson Oil & Gas LimitedCopyright Business Wire 2012