QUEENSLAND, Australia, June 6, 2011 /PRNewswire/ --
Linc Energy has acquired, through its US subsidiary, 14 producing oil fields on 156 leases spanning 13,400 acres in the Gulf Coast Region of Texas and Louisiana in the United States, from ERG Resources LLC, at a purchase price of US$236 million.
The fields are currently producing 3,300 barrels per day (over 1.1 million barrels annually).
Linc Energy's CEO Peter Bond said the immediate plan for the fields is to increase oil production and conduct further drilling to optimise output.
"This acquisition is the next big necessary step that Linc Energy has taken to meet its two key business targets over the coming 12 to 18 months," Mr Bond said.
"The first of these targets is to achieve in excess of 20,000 barrels per day of oil production by the end of 2012, with at least 10,000 barrels of production by the end of 2011.
"The second key target for the Company, supported directly by achieving this first target, is to develop very profitable, solid cash flows from operations."
"I hope to exceed 6,300 barrels per day (over 2.2 million barrel per annum) by the fourth quarter of 2012 on the ERG fields," Mr Bond said.
The fields contain Net Proven Reserves (1P) of 20.5 Million Barrels of Oil (MMBO), and Net Proven and Probable Reserves (2P) of 22.3 MMBO.
"These assets are cash flow positive from day one of the acquisition," Mr Bond said.
"Linc Energy is using about 75 per cent debt funding to purchase the ERG Resources assets. I've always run Linc Energy as a low to no debt company.
"This philosophy will ensure Linc Energy gains cash returns in the short term and yet can keep those assets profitable and growing for many years to come."
"I strongly believe that Linc Energy can grow to greater than 100,000 barrels of oil per day production within the next five years, and I'm pleased to say this ERG Resources acquisition is the first BIG step towards that very goal, whilst also ticking another Linc Energy milestone. As always I look forward to updating you on the journey ahead. There will be a lot to keep up with, because there is now a lot of traction in the business," Mr Bond said.
For more detailed information on this transaction visit the latest ASX announcement on the lincenergy.com.au website.
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SOURCE Linc Energy