American Patriot Oil and Gas has signed a letter of intent (LOI) to acquire an additional conventional oil and gas asset in South Texas, US, from HJH Resources.
The asset currently produces 40 barrels of oil a day (boepd) and 374mcfd of gas (102boepd), while it is estimated to contain 430,000boe proven oil and gas 1P reserves under independent reserve reports.
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The reserves, acquired for $1.2m, are estimated to generate more than $15m in revenue for the company.
The South Texan asset comprises 38 Austin Chalk producing wells on 43 leases. It also requires minimal workover expenditure to boost production.
Engineering due diligence has already been completed on the asset, while land title and environmental due diligence are pending.
American Patriot Oil and Gas CEO Alexis Clark said: “We are continuing our rapid build-up of producing assets in Texas, completing our fifth transaction in the second half of 2017.
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By GlobalData“The transformation of American Patriot into a significant production company focused on the US continues with this deal, building a significant reserve base with upside potential to grow production and cash flow in line with an increasing oil price.
“We have identified a number of additional acquisition opportunities, including assets that are an order of magnitude larger than those we have recently acquired, and we will look to execute on those as build production to well over 1,000boepd in 2018.”
The existing infrastructure at the property, including pump jacks, tanks and batteries, is complete and was stated to be in good working condition.
It also has a gas pipeline to provide direct access to the market and nearby refineries.
The acquisition is expected to close in mid-January next year.
American Patriot will also operate this South Texan asset, while the existing owner will assist the company during the transition period.
