Jericho Oil Corporation a growth-oriented oil company engaged in the acquisition, exploration, development and production of overlooked and undervalued oil properties in the US, has signed a purchase and sale agreement to acquire a 50% working interest in producing wells and leaseholds in northeastern Oklahoma for a total cash consideration of US$762 500 from Chaparral Energy.
The 2500 acre acquisition represents Jericho’s second in the northeastern Oklahoma region since the beginning of 2015 and brings its total acreage position across Kansas and Oklahoma to over 8300 acres. The asset, which produces approximately 80 gross boe/d (to the 100% WI), is in areas complementary to Jericho’s existing operations in northeast Oklahoma. The acquisition allows Jericho to purchase production (97% oil, 3% gas), reserves, cash flow and equipment at an appreciable discount from the underlying value of the asset.
“In an environment of lower oil prices and sellers generally not willing to capitulate, we are pleased to be able to add such a fundamentally sound asset to our portfolio. The acquisition is consistent with Jericho’s current strategy of capitalizing on acquisition opportunities to enhance the quality of its asset base throughout the commodity price cycle,” Allen Wilson, CEO of Jericho, stated.
Overall, the asset consists of 17 producing well bores and 8 salt water disposal wells. Of the 17 producing well bores, 6 were horizontally drilled and completed, while the remaining wells were drilled vertically. The wells are drilled into various formations including the Mississippi Lime (the focus of the horizontal drilling), Bartlesville, Skinner, Red Fork and Cleveland.
In addition to adding high quality production and cash flow to Jericho’s portfolio, there are approximately 10 - 15 de-risked vertical offset locations to the horizontal wells – many of which were spotted and staked prior to the precipitous decline in the price of oil. The six horizontal wells, individually, had initial production rates in excess of 300 bpd.
Jericho financed the transaction with available cash on hand and continues to operate with no debt.
Adapted from a press release by David Bizley