Buyer terminates LoI to acquire Samson Oil and Gas’ assets in US

Samson Oil and Gas has reported that its previously announced sale of its Foreman Butte project in North Dakota and Montana, US, has not materialised after the buyer was unable to complete the financing plan for the transaction.

Last month, Samson signed a letter of intent (LoI) with private equity-funded exploration and production company Firehawk Oil and Gas in connection with the sale, valued at $41.5m.

As a result of the termination of the transaction, the company intends to proceed with a previously proposed $30m refinancing.

The proposed new debt facility is conditional upon customary due diligence conditions and is expected to allow the company to repay its existing lender in full.

Furthermore, the $30m facility is expected to fund working capital needs for recommencement of the company’s extensive development drilling programme.

However, the decision to proceed with such a refinancing is linked with the reduction of certain transactional expenses.

If the company cannot reduce the expenses significantly, then it may opt for another asset sale instead of the proposed refinancing transaction.

Acquired for $16m in January 2016, the Foreman Butte project, also known as the Home Run field, was developed on a 640-acre spacing pattern.

As per the company’s engineering and geologic analyses, only 3.2% of the original oil in place has been recovered to date.

Samson noted that there is potential to recover significant undeveloped oil from the field.

During the year ending 30 June 2017, the company achieved a production of 253,168 barrels of oil and 52,281mcf of gas from the wells in the field.