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VAALCO Energy, Inc. (“VAALCO”) (NYSE: EGY) today announced the signing of a letter of intent with Magellan Petroleum Corporation (NASDAQ: MPET) to acquire and develop an operating working interest in approximately 23,000 net mineral acres of oil, gas and mineral leases covering the Bakken and deeper formations in the East Poplar Unit and the Northwest Poplar Field in Roosevelt County, Montana (“the Poplar Field”). VAALCO expects to complete the transaction during the next sixty days.
Under the terms of the acquisition, VAALCO expects to acquire a 65% working interest in the Bakken and deeper rights of the Poplar Field. VAALCO will operate its deep rights in the subject acreage in return for cash consideration at closing and its funding of 100% of the cost to drill three wells by the end of 2012, including one well by June 1, 2012, at a cost to VAALCO of approximately $5 million per well.
Magellan will retain its current ownership for all formations above the Bakken, including the currently producing Charles and Tyler formations and will retain the remaining 35% of the Bakken and deeper rights in partnership with VAALCO.
Robert Gerry, Chairman and CEO said, “We are very pleased to have this additional opportunity to prove up reserves in the Bakken formation and potentially in deeper formations, including the Three Forks, Nisku, and Red River formations. We believe that this is a high quality prospect and we are optimistic that this will be a source of oil revenues to VAALCO over the next several years.”
In May 2011, VAALCO acquired a 70% working interest in 5,214 acres in Sheridan County, Montana, which is adjacent to Roosevelt County, Montana.
VAALCO Energy, Inc. is a Houston based independent energy company principally engaged in the acquisition, exploration, development and production of crude oil. VAALCO’s strategy is to increase reserves and production through the exploration and exploitation of oil and natural gas properties with high emphasis on international opportunities. The company’s properties and exploration acreage are located primarily in Gabon and Angola, West Africa and the United States.