Stock prices of Delta Petroleum Corp. jumped upon news of the company’s intent to sell a non-operated working interest in its Vega Area assets in the Piceance Basin to Opon International LLC for $400 million.
The Denver-based company’s share price rose 30.15% in Thursday's trading, closing at $1.77, its highest price since October.
Delta will retain operations of the Vega Area subject to a joint venture agreement with Opon. The oil and natural gas company plans to use $225 million of the proceeds for the development of the Vega Area over the next three years and use the remainder for its balance sheet obligations and general working capital purposes.
Upon closing of the transaction, Delta will issue warrants to Opon to purchase 13.3 million shares of Delta common stock at $1.50 per share and 5.7 million shares at $3.50 per share.
The offer is contingent upon Opon’s ability to arrange financing. In addition to private equity and industry and institutional partners, the company has, in the past, received funding from Wells Fargo Bank, Key Bank, and N.M. Rothschild & Sons Ltd. Delta has granted Opon a 60-day exclusive period to finalize the transaction, which is expected to close on or before June 1, 2010.
Denver-based Opon currently has operations in Columbia and the US Rocky Mountain Region.