Evolution Petroleum announced that it has entered into a definitive agreement to acquire non-operated natural gas assets in the Jonah Field in Sublette County, Wyoming from privately-owned Exaro Energy III, LLC.
The purchase price of the transaction is $29.4 million, with the closing date scheduled for April 1, 2022.
As a result of this accretive transaction, Evolution Petroleum is able to diversify into natural gas assets in Wyoming, providing access to multiple attractive markets including to the west through the Opal market hub, with the optionality to flow to eastern markets, according to its president and CEO, Jason Brown.
The Houston-based company, Evolution, owns, manages, and develops producing properties with the aim of providing a sustainable dividend yield for its shareholders. As part of the company's long-term strategy, it will strive to develop a diversified portfolio of oil and natural gas assets.
At present, Evolution's portfolio of non-operated assets includes interests in multiple geological formations, including the Barnett Shale in North Texas, the Delhi Field in Louisiana, the Hamilton Dome Field in Wyoming, and assets in the Williston Basin in North Dakota — the result of a $25.9 million acquisition closed earlier in the year.
Due to the company's recent acquisitions in the Williston Basin and Jonah Field, the company has been able to boost cash flow generation and significantly grow production volumes through low-risk development drilling. The top management of Evolution also plans to extend dividend payments through these acquisitions for the next decade.
Among the assets are 42 billion cubic feet of natural gas equivalent (bcfe) of long-life proved developed producing reserves in the Jonah Energy LLC-operated natural gas field in the northwestern portion of the Green River basin. The field has 648 producing wells and spawns approximately 1,040 net acres.
A total of 14.2 MMcfe/d is currently being produced from acquired assets; 88% of that is natural gas, 6% is oil, and 6% is NGL. Jonah Energy has operated all of the wells since 2014, and the company is an established operator in Wyoming.
Within the last two years, Evolution has more than 400% increased production and reserves. Moreover, this growth and value creation have occurred without material shareholder dilution or onerous debts.
After taking into account expected incremental debt, Brown estimates a debt level post-closing to be below one-time Evolution's pro forma annualized EBITDA.
That transaction took effect on February 1. We anticipate closing on or about April 1. The deal is expected to be funded from cash on hand and borrowings under the Company's existing senior credit facility.
