Principal Solar Inc., an all-of-the-above energy company, said on March 15 that it has signed an agreement to purchase a controlling working interest in oil and gas leases, wells and associated assets in the more than century-old Minerva-Rockdale oil field in Milam County, Texas.
Principal Solar, an over-the-counter (OTC) company not listed on major exchanges, said it would purchase the Navarro A & B formations assets from San Antonio’s Winchester Oil & Gas LLC for an undisclosed sum.
Principal Solar said it signed a letter of intent (LOI) to acquire approximately 11,000 gross acres and 936 total production and disposal wells. The purchased assets include 657 pump jacks, 48 tank batteries and 2.3 miles of pipeline.
“Principal’s controlling working interest acquisition represents a tremendous potential opportunity for our two companies,” said K. Bryce “Rick” Toussaint, chairman and CEO of Principal Solar. “We anticipate that Winchester's leases, equipment and operational expertise combined with our know-how, relationships and deep capital markets experience stand to transform the storied Minerva-Rockdale Oil Field into a reliable source of increasingly profitable production and revenue.”
The Minerva-Rockdale field was discovered in 1921 and was once one of the largest oilfields in Texas, according to Principal Solar. Prior to 1950, the field produced 4 MMbbl of oil. Total production from August 2014 to today stands at 481,000 bbl.
“The Minerva-Rockdale working interest acquisition offers truly remarkable upside potential to Principal, its partners and its stakeholders,” said Anthony Lerner, Principal Solar’s COO.
The company said an engineer’s reserve report by MKM Engineering in January 2022 found “significant reserves of oil yet to be recovered,” Principal Solar said in a news release.
The engineers report indicates “total proven reserves of approximately 4,102,680 barrels,” valued at approximately $116 million today, Lerner said.
“With a substantial capex budget expected to be in place by the closing date of the LOI, we plan to return 100-120 of the non-producing shut-in wells to full production status, which we anticipate will double or triple production in the first 9-12 months,” Lerner said.
Current production stands at approximately 200 bbl/d with 74 wells producing in the Navarro A & B formations. The remaining wells are shut-in, non-producing wells that will require the development, funding and implementation of a workover program, the company said.
Principal Solar said it is a strategic investor in and acquirer of organizations and technologies that support next-generation opportunities in traditional, renewable and clean energy sectors, as well as an acquirer and operator of undervalued petroleum-producing properties.
The company plans to fund the acquisition via a combination of restricted stock and the assumption of some debt, and under the terms of the LOI, the company has the right of first refusal to purchase the energy assets accumulated from Winchester and/or its joint venture partners.
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