PetroShale announces $55-million deal in the North Dakota Bakken


CALGARY -- PetroShale Inc. has announced that it has entered into an agreement with an independent oil and gas company to acquire high-quality, light oil-weighted assets in the core of its focus area in the North Dakota Bakken.

The acquisition includes approximately 550 boed of low decline, producing assets as well as significant undeveloped acreage which will enhance the company's net drilling location inventory and undeveloped land base.

Total consideration for the acquisition is $55 million, prior to customary closing adjustments, payable in cash.

The acquisition

The acquired assets are situated in the core of PetroShale’s existing focus area in North Dakota. The assets include existing light oil production, as well as three drilling units, which are primarily undeveloped and will be 100% operated by PetroShale.

Anticipated benefits of the Acquired Assets include:

• 100% operatorship and held by production, which provides control over timing of development and completion technique;
• Approximately 19 gross (14.3 net) high quality, light oil drilling locations internally identified by management, representing a 24% increase to 73.8 net drilling locations from our current 59.5 net drilling locations;
• Identified locations associated with the acquired assets are considered by management to be low-risk, infill locations in the core of the North Dakota Bakken, and are anticipated to provide attractive economics even in lower commodity price environments;
• 1,981 net acres of land, representing a 34% increase over the Company’s existing acreage position;
• High ownership in each drilling unit, ranging from 45% to 98%, is expected to enable PetroShale to realize meaningful participation in production increases from the acquired assets; and
• Average royalty rate of approximately 14% is below PetroShale’s current corporate average of 20% and is expected to contribute to enhanced corporate operating netbacks.

The acquisition is consistent with PetroShale’s focus on acquiring and developing high quality lands in the core of the North Dakota Bakken/Three Forks, which have the potential to provide upside for its shareholders through both production and reserve growth. With the additional drilling location inventory and operated control from the acquired assets, PetroShale says it is well positioned to grow production and sustain volumes at a higher level going forward.

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