Denver, CO-based Emerald Oil Inc. (NYSE MKT: EOX) has executed an agreement to sell its interests in approximately 30,902 net mineral acres in the Sand Wash Basin to a private oil and gas company for approximately $10 million cash at $325 per acre, subject to customary adjustments. Closing will occur during the first quarter of 2013, contingent on due diligence and other conditions precedent in the sales agreement.
In a related transaction, the independent oil and gas exploration and production company has agreed to assign its interests in its Fly Creek coal bed methane (CBM) operation and three Niobrara oil wells drilled in 2011 to the remaining working interest holder of the assets and to pay $500,000 for Emerald's share of abandonment costs. The assets subject to this transaction are located on the 30,902 acres being sold by Emerald.
Emerald currently holds leases in approximately 45,100 net mineral acres in the Sand Wash Basin of the Greater Green River Basin, which is prospective for the Niobrara shale oil and other secondary target formations known to contain oil and natural gas. The 30,902 net acres being sold from Emerald's Sand Wash Basin acreage are located in Carbon County, Wyoming, and Moffatt County and Routt County, Colorado, in an area known as the Fly Creek Prospect. The company will retain approximately 14,000 net mineral acres in and immediately surrounding the Focus Ranch Unit located in Routt County, Colorado. Emerald will also retain its 45% interest in the 6-inch diameter natural gas gathering pipeline that extends approximately 18.5 miles in length from the Fly Creek CBM production facilities located in Moffat County, Colorado, to a Questar pipeline connection located near the town of Baggs in Carbon County, Wyoming.
In connection with the transaction, Canaccord Genuity acted as financial advisors to Emerald and Davis Graham & Stubbs LLP acted as legal counsel.