with Agency report
02 April 2018, Sweetcrude, Lagos — Contango Oil & Gas Company, today, announced the sale of its operated Eagle Ford Shale assets located in Karnes County, Texas to an independent oil and gas company for $21 million.
The divestiture closed on Wednesday, March 28 and included approximately 1,500 gross (1,050 net) acres.
Production from the sold assets was approximately 123 barrels of oil equivalent (Boe; 95% oil) per day.
The cash proceeds from the transaction will be used to pay down outstanding borrowings under our revolving credit facility and for general corporate purposes, including the development of the company’s Southern Delaware Basin position, Contango said in a statement.
Allan D. Keel, the company’s President and Chief Executive Officer, said: “This asset accounted for a little over 1% of our current production and only 2% of our proved developed year-end SEC reserves”.
As a result, the company said no unscheduled adjustment to the borrowing base under its credit facility was required.
“The sale represents an acceleration of value as it was not likely to be developed by us in the near future as we continue to focus on our Southern Delaware Basin position”.
Due to the excellent rates of return expected from the Delaware Basin in this price and cost environment, the company said its conservative philosophy on funding its capital program, has helped it to obtain additional liquidity to continue to develop the acreage.