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Samson Announces Ripper Of A Niobrara Deal

|Includes: Samson Oil & Gas Limited (SSN)

SSN To Down Niobrara Acreage

Samson has entered into a binding agreement to sell 60% or 24,166 acres of its Goshen County, Wyoming, Niobrara play to a "large, U.S. - based independent". The sale price is dependent upon the ultimate structure of the deal"

  • All 24 K acres  - $79.1mm ($3,270 / acre, pre tax)
  • Without the formation of an Exploratory Unit that would protect some leases expiring this year - $69.8 mm ($2,900 / acre)
  • No exploratory unit formation and drilling operations don't commence prior to lease exploration (pretty unlikely) - $61 mm  ($2,525 / acre)

SSN retains a 4.8% royalty interest (receives net revenues for no operating costs expended).

Timing: The deal is tentatively schedule to close on July 26th, pending due diligence. Since this is the southern half of SSN's position, which is adjacent to the northern piece of EOG's much larger Niobrara piece I'd bet the buyer is EOG and that they will get what they want ... so the deal is more likely than not to work.

Nuthshell: Sum of the parts:

  • After the deal, Samson will still have 16,254 net acres in the play. If we employ the low end of the valuation range above that would value this piece at $41 mm or $0.57 per share.
  • The sold properties would have a pre tax range of $0.85 to $1.10 per share.
  • Finally, there are the 6 sections in the Bakken to consider. Since there is little running room left here I'd value them at about $15 per potential BOE of reserves which I put at about 1 million net barrels or $15 mm or $0.21 per share. 
  • Net debt at last update was 8 mm ($0.11 per share)
  • That comes to a potential quick back of the envelope acreage based NAV of $1.52 to $1.77 per share.
  • We continue to own the shares in the ZLT.

Disclosure: Long SSN