US Energy signs deal to acquire producing assets in Bakken formation

US Energy has signed a memorandum of understanding (MoU) with APEG I Partners, a Texas partnership (APEG) to purchase oil and natural gas producing assets in the Bakken formation of North Dakota.

Under the terms of the MoU, US Energy will acquire all of APEG’s interest in 67 wells in Williams and McKenzie counties, North Dakota.

According to the company, the acquisition is expected to add highly complementary assets to its existing portfolio in North Dakota.

Following the completion of the transaction, US Energy will have access to around 1.1MMBOE of proved developed reserves and 400boepd of current production across 1,600 net acres.

Through the $17.8m transaction, the company intends to consolidate its leasehold position in the area by tapping potential opportunities for acreage swaps.

US Energy CEO David Veltri said: “This is an exciting transaction for US Energy that, upon closing, will approximately double the company’s existing production base in a highly economic area in which we have significant experience.

“We are pleased with the considerable progress US Energy has made over the past year and the subsequent improvement in nearly all operational and financial metrics.”

Over the past several quarters, the company has been primarily focused on the divestment of under-performing non-operated oil and gas assets.

Veltri added: “US Energy will remain focused on adding accretive assets that immediately increase the production, revenue and cash flow of the company.”

Besides the cash payment, the company will issue common and preferred stock and assume APEG’s outstanding commodity derivatives, as part of the total consideration for the acquisition.

US Energy is also planning to establish $8m and pursue potential strategic dispositions to reduce leverage and reduce borrowings under the new credit facility.

The transaction is subject to the receipt of Nasdaq approval and the approval of the stockholders of the company.