U.S. Energy Corp. has introduced that it has entered into an unique non-binding Memorandum of Understanding to amass oil and pure fuel producing properties concentrating on the Bakken formation of North Dakota.
The Company has entered right into a Memorandum Of Understanding (MOU) with APEG I Partners, a Texas partnership (APEG), to amass all of APEG’s curiosity in 67 wells concentrated in Williams and McKenzie Counties, North Dakota. APEG is an affiliate of APEG Energy II, LP, the Company’s largest stockholder. The Transaction will add extremely complementary belongings to the Company’s present portfolio in North Dakota, with comparable operators and growth potential. The closing of the Transaction will consequence within the
acquisition of roughly 1.1 MMboe of proved developed reserves (79% oil) and 400 boed of present manufacturing throughout 1,600 web acres. The Company expects the transaction will create further alternatives for growth and acreage swaps that might allow the Company to proceed consolidating its leasehold place within the space.
The complete consideration for the Transaction is roughly $17.eight million, consisting of a mixture of money, issuance of frequent and most well-liked inventory of the Company and the idea of APEG’s excellent commodity derivatives. Additionally, the Company plans to determine a brand new $eight million revolving credit score facility, for which the Company has obtained a non-binding time period sheet from a standard reserved based mostly lender. Subsequent to closing, the Company plans to proceed lowering leverage via constructive money circulation from operations and potential strategic tendencies, utilizing the proceeds to scale back borrowings below the brand new credit score facility. If accomplished, the Transaction could have an efficient date of July 1, 2018. The closing of the transaction is conditioned on acquiring the required debt and fairness financing, Nasdaq approval and the approval of the stockholders of the Company at a particular assembly to be scheduled for December 2018.
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