Plans to sell its coalbed methane properties.
GeoMet Inc. (Nasdaq: GMETP) plans to sell its coalbed methane properties in Alabama to a private independent oil and gas company with interests in Alabama for $63.2 million.
GeoMet plans to use the cash proceeds from this asset divestiture, net of purchase price adjustments and other transaction related expenditures, to repay debt.
GeoMet has amended its credit agreement, which became effective as of May 1, 2013 and provides the necessary consents to sell the Alabama Properties. The amendment requires repayment of a minimum of $52 million which will result in the elimination of the “non-conforming” tranche B portion of total outstanding borrowings.
Following the expected use of net proceeds for repayment of indebtedness, GeoMet’s borrowing base will be the lesser of $83 million or actual outstanding borrowings at such time.
GeoMet’s average net interest in the Alabama properties produced approximately 9,700 thousand cubic feet (Mcf) of natural gas per day during the month of March 2013, or approximately 29% of the company’s total production for this time period on the basis of accounting principles generally accepted in the United States.
As of March 31, 2013 and based on Securities and Exchange Commission guidelines, GeoMet’s net proved reserves attributable to the Alabama Properties were estimated to be approximately 43 Bcf, all classified as proved developed reserves.
The effective date of this transaction is April 1, 2013, and it is expected to close on or before June 14, 2013. Lantana Oil & Gas Partners was divestment advisor to GeoMet for the sales process.