DENVER, April 11, 2012 /PRNewswire/ -- Resolute Energy Corporation ("Resolute" or the "Company") (NYSE: REN) today announced that it has entered into two transactions regarding its interest in Greater Aneth Field through which Resolute and Navajo Nation Oil and Gas Company ("NNOG") will consolidate their interests in the field to strengthen and clarify their strategic relationship.
In the first transaction, Resolute entered into an agreement with affiliates of Denbury Resources Inc. pursuant to which Resolute and NNOG acquired all of Denbury's interests in Aneth Field for total cash consideration of $75 million. These working interests were acquired by Resolute and NNOG on a 50%/50% basis and were the last significant ownership interests in the field that were not owned by Resolute and NNOG. The interests are located in the Aneth Unit and the Ratherford Unit. The transaction has an effective date of January 1, 2012.
Contemporaneously with this transaction, Resolute and NNOG also entered into an amendment to the Cooperative Agreement between the parties. Among other changes, this amendment allowed NNOG to exercise an option to purchase 10% of the interest owned by Resolute in Greater Aneth Field before giving effect to the Denbury transaction discussed above. This option was exercised for cash consideration of $100 million. The parties entered into a purchase and sale agreement relating to the option exercise which provides that the transaction will be closed and paid for in two equal transfers, each for 5% of Resolute's interest in the properties. The transfers will take place in July 2012 and January 2013, each with an effective date of January 1, 2012. The transaction is subject to customary purchase price adjustments and secured by a 10% deposit.
The Cooperative Agreement amendment stipulates that NNOG has one remaining option to purchase an additional 10% of Resolute's interest in the Aneth Field properties. The remaining option has a fixed exercise date of July 2017, and applies to 10% of Resolute's interest in the Aneth Field properties (as it stood prior to this current option exercise and excluding the interest acquired from Denbury and certain other minority interests) at the then fair market value of such interest.The net effect of the acquisition of properties from Denbury and the sale of properties to NNOG, following full consummation, will result in Resolute's working interests in the Aneth Unit and the Ratherford Unit remaining essentially unchanged at 62% and 59%, respectively, and its working interest in the McElmo Creek Unit being reduced to 67.5% from 75%. This is a result of the fact that Denbury did not own any interest in the McElmo Creek Unit. Had the transactions closed on January 1, 2012, Resolute's proved reserves would have been approximately 1.9 MMBoe lower than previously reported and it would have received net cash proceeds of $62.5 million. Due to the deferred nature of the NNOG closings, the actual reserves transferred will be lower. As required by generally accepted accounting principles, the reserves associated with the properties being sold to NNOG will remain on Resolute's books, and the Company will record the production, revenue, capital costs and expenses from such properties until such time as the sales to NNOG are closed. The net proceeds of production from January 1, 2012, through each of the closing dates will be an offset to the purchase price to be paid at such closing. The amendment to the Cooperative Agreement also provides for certain additional administrative clarifications, and formalizes Resolute's arrangement with NNOG regarding life-of-lease access to NNOG's crude oil truck loading facility.