Strategic American Oil has signed a purchase & sale agreement to acquire a private Texas oil and gas Company for $9.9m.
The Texas company produced around 2.3 million cubic feet of natural gas per day (mmcfe/d), or 378 barrels of oil per day (boe/d) for the five months till 1 January 2011.
As of 1 October 2010, the reserves were estimated by a third party engineering report to total 3.6 million barrels of oil equivalent (boe, or 21.9 billion cubic feet of natural gas equivalent (bcfe).
Therefore, these properties are being purchased for about $0.45 per proved mcfe, or $2.75 per proved boe.
Strategic American Oil CEO Jeremy Driver said the purchase of these high quality assets with significant upside concentrated in oil could greatly benefit the company’s shareholders in the future.
The deal is dependent on the completion of financing, and customary closing conditions and adjustments.