The purchase price is expected to be funded with $40.1 million in cash and $13.3 million in Teton common stock. Terms also include warrant coverage of 625,000 shares at a $6 strike price with a two-year term. Closing is expected to occur on or before April 25, 2008, with an effective date of March 1, 2008.
The purchase price includes an estimated 11.3 billion cubic feet equivalent (Bcfe) or 1.89 million barrels of oil equivalent (MMboe) of proved reserves and an estimated 4.25 million cubic feet equivalent per day (MMcfed) or 710 barrels of oil equivalent (Boe) of daily production.
The sellers’ proved reserves are approximately 92% oil and 92% of their reserves are developed and are located on approximately 1,571 gross acres. When combined with Teton’s existing reserves, Teton will have proved reserves of approximately 54% natural gas and 46% oil.
In addition, the ratio of Teton’s developed reserves in the proved category will increase from 61% to 75%. Teton has also estimated net risked probable reserves to be 6.8Bcfe. The purchase price includes 50 producing wells, 22 wells with production behind pipe, five wells drilling or waiting on completion and 31 identified undeveloped locations.
The proved and probable assets to be acquired have a 92% working interest and a 76% net revenue interest to Teton. This acquisition will nearly double Teton’s 2007 year-end proved reserves of 14.1Bcfe and Teton’s 2007 exit production rate of 4.3MMcfed.
