Evolution Petroleum closed its acquisition of assets in Wyoming’s Jonah Field from privately-owned Exaro Energy III LLC for a net purchase price of $26.2 million, the Houston-based company said April 4.
“We are pleased to successfully close on another accretive transaction—the acquisition of nonoperated natural gas assets in the prolific and long-life Jonah Field in Wyoming,” Jason Brown, president and CEO of Evolution Petroleum, commented in a company release.
The Jonah Field acquisition will increase pro forma net daily production by 37% to roughly 8,000 boe/d and add about 38 Bcfe of natural gas of long-life PDP reserves to Evolution Petroleum’s portfolio.
“The company has a clear strategy based on evaluating and executing accretive transactions that meet stringent criteria while keeping debt levels at a conservative level,” Brown continued, “We remain focused on securing incremental long-life and low-decline reserves that generate strong cash flow, further supporting the long-term strategy of providing a meaningful return of capital to shareholders through a quarterly cash dividend program that has been in place for more than eight years.”
The Jonah Field acquisition included an average net working interest of 19.6% and an average net revenue interest of 14.9% in 595 producing wells and 956 net acres. Current estimated net daily production from the asset is approximately 10.8 MMcf of natural gas, 120 barrels of NGL and 112 barrels of oil.
The Jonah Field assets, operated by Jonah Energy LLC since 2014, also have access to multiple attractive markets, including west to the Opal market hub and optionality to flow to eastern markets, according to the release.
The transaction, which, according to the company release, closed on April 1, marked Evolution Petroleum’s second acquisition in 2022. In January, the company closed on the acquisition of 50% of certain interests held by privately-owned Foundation Energy Management within the Williston Basin for $25.9 million.
“In 2022 Evolution has executed two strategic acquisitions that have substantially evolved its commodity product mix, expanded its asset footprint, strengthened future cash flow generation, and added inventory of low-risk development drilling,” Brown said. “As a result, we have been able to restore our cash dividend back to the pre-pandemic level while substantially increasing free cash flow to rapidly pay down our modest amount of outstanding debt and fund development drilling of our proved undeveloped location inventory in the Williston Basin.”
Evolution said in February, when the Jonah Field acquisition was announced, that it expected to fund the transaction using cash on hand and borrowings under its existing senior credit facility. With the incremental debt, the company’s ratio of debt to pro forma annualized Adjusted EBITDA remains well below the targeted level of one times, according to the release on April 4.
“Going forward, our priorities will be the evaluation and execution on additional targeted transactions that complement our portfolio, as well as conservative development of existing assets that further support meaningful ongoing cash return of capital to shareholders,” Brown added.
Evolution long-term goal is to build a diversified portfolio of oil and natural gas assets primarily through acquisition, while seeking opportunities to maintain and increase production through selective development, production enhancement and other exploitation efforts on its properties, according to the release.
Currently, the company’s assets include our nonoperated interests in the Barnett Shale in North Texas, a CO₂ EOR project in Louisiana’s Delhi Field, a secondary recovery project in Wyoming’s Hamilton Dome Field, and the recently acquired properties in the Williston Basin in North Dakota and Jonah Field in Wyoming.
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