Expectations are high using offset well production results as a comparison...however actual Bulls Eye results not expected until September...
"Abraxas spudded the Company’s first well targeting the Austin Chalk, the Bulls Eye 101H, on June 16, 2016. The Company recently set surface casing to 4,670 feet. Gross drilling and completion costs for Abraxas’ first 5,700 foot lateral Austin Chalk well are estimated at $5.8 million. Abraxas expects to complete this well in August 2016 and expects first production by September 2016."
DENVER, July 06, 2016 (GLOBE NEWSWIRE) -- U.S. Energy Corp. (Nasdaq:USEG), a Wyoming corporation (the "Company"), has entered into a non-binding Letter of Intent with IronHorse Resources LLC. pursuant to which the Company expects to acquire a 40% interest in IronHorse Resource's Farmout Agreement to participate in developing three core areas in the DJ Basin, Wattenberg Field in Weld County, Colorado.
Under the Participation Agreement, the Company will obtain working interests averaging 11.6% in 21 horizontal wells to be drilled in the A, B, and C benches of the Niobrara formation and the Codell formation.
The DJ Basin is a crude oil and liquids rich natural gas play located in Northeastern Colorado and Southeastern Wyoming. The Company believes that the Wattenberg Field of the DJ Basin offers attractive economics at current strip prices for oil and gas. The DJ Basin Wattenberg was discovered in 1970 and is one of the 15 largest developments of gas in the country.
The development program is slated to begin later this year and drill into mid 2017. The Company's commitment will cost approximately $9.6 million for drilling and completing the wells and is expected to generate revenue of approximately $4.9 million in each of the first two years of the program net to the Company, at a current price of $47.00/BO and $2.78/MCF and assuming future strip pricing and differentials. The Company estimates that it could generate a 43% increase in reserves at a finding and development cost of $12.18/ BOE, a ROR of 38% and a ROI of 2.4.
The transaction is a continuation of the transformation of the Company to solely focus on its ongoing oil and gas business. The Company previously announced a restructuring of the company by reducing its overhead costs, moving the corporate headquarters to Denver, Colorado for better access to financial services and to improve access to oil and gas deal flow.
David Veltri, CEO and President of the Company stated, "We are very excited about gaining access to such a great investment opportunity with experienced DJ Basin companies and seasoned individuals with IronHorse. U.S. Energy Corp. hopes to grow its position in the DJ Basin while leveraging this experience into an operated position in the future. We continue to look for acquisitions of producing properties, consolidating our current positions in the Bakken and Eagle Ford trends in addition to divesting nonstrategic assets."
About U.S. Energy Corp.
U.S. Energy Corp. is a natural resource exploration and development company with a primary focus on the exploration and development of its oil and gas assets. The Company is headquartered in Denver, Colorado and trades on the NASDAQ Capital Market under the symbol "USEG".
Disclosure Regarding Forward-Looking Statement
Safe Harbor for forward-looking statements: Statements in this release looking forward in time, including statements regarding the proposed transaction and its expected benefits to the Company, involve known and unknown risks and uncertainties, which may cause U.S. Energy Corp.'s actual results in future periods to be materially different from any future performance suggested in this release. Such factors may include, but may not be limited to, a potential inability to enter into definitive agreements relating to the transaction, close the transaction, finance future capital expenditures relating to the properties and achieve the anticipated benefits of the transaction, changes in the prices received by the Company for oil and natural gas, regulatory limitations on the Company's operations, and other risk factors disclosed in the Company's filings with the Securities and Exchange Commission, which are incorporated herein by reference. The Company does not undertake to update any forward-looking statement.