Wapiti Energy LLC has formed Wapiti Oil & Gas II LLC and has entered into an agreement with a subsidiary of Gasco Energy Inc. to acquire natural gas reserves in the Rocky Mountain region.
Under the terms of the transaction which are subject to customary closing conditions, Wapiti will purchase an undivided 50% interest in Gasco’s Uinta Basin producing oil and gas assets for $20.75 million in cash, and carry Gasco for $15 million of drilling and completion costs in a $37.5 million drilling program to be carried out over the next two years. In addition to the previously mentioned carry, Wapiti will expend an additional $15 million to cover its proportionate share of the drilling and Gasco shall pay an additional $7.5 million alongside Wapiti. If on February 23, 2013, the 5 year NYMEX natural gas strip closes at a price greater than or equal to $5.00 per MMBTU, Wapiti will increase the size of the drilling program to $43.75 and carry Gasco for an additional $2.5 million.
Bart Agee, president and CEO of Wapiti commented, “This transaction adds to our large, low risk, gas position in the Rockies, and when closed, will increase Wapiti Energy LLC’s total completed transactions to over $920 million throughout its ten year history. I’m extremely proud of our management team’s efforts on this deal and our on-going commitment to deliver superior results to our Wapiti stakeholders.”