04/29/2009 @ 10:00AM
Arete Industries, Inc. Announces Definitive Agreement for Purchase of Oil & Gas Properties
WESTMINISTER, Colo., April 29 /PRNewswire-FirstCall/ -- Arete Industries, Inc. (Pink Sheets: ARET) announces that the Company signed a definitive agreement to purchase oil and gas properties in Wyoming, Colorado, Kansas, and Oklahoma from DNR Oil & Gas Company and Tindall Operating Company for cash and additional consideration.
The wells being offered by DNR & Tindall total 243 wells, including 46 operating wells (PDP) and 197 PUDS (PUD), with a discounted reserve value of the proven & developed, and the proven & undeveloped of $38,000,000. The reserve value assumes a 15% discount and uses $42 per barrel oil and $5 per Mcf gas. The current operating wells at today's oil and gas prices will generate net working interest revenues of approximately $3,635,000 a year or monthly net working interest revenue of $303,000, all based on oil at $42 per barrel and gas at $5 per Mcf. Arete purchased the TOP Gathering System located in Campbell County, Wyoming in September of 2006. This pipeline is connected to DNR's gas properties in Wyoming and is currently transporting approximately 900,000 Mcf of gas per day for the DNR wells and is cash flowing from its operations. The pipeline has capacity of three times as much gas as is presently being delivered, based on current compression, and developing the present leases would help fill that capacity. The purchase of the pipeline is part one of Arete's four part program of merging, purchasing, developing, and acquiring operations in the oil & gas industry. The financing of the project is being coordinated by First Diversified Financial Services, Inc. of Houston, Texas. The loan will be a two year term loan for $13,000,000 that includes $10,000,000 for the acquisition and the remaining $3,000,000 for the costs of the loan and drilling in the next 18 months. We plan to complete the transaction by June 1, 2009.
We plan to complete all filings for Arete by the end of June 2009 and file the necessary paperwork to be listed on the OTC BB early third quarter. "This has been a long time coming and we have worked very hard to make this happen. The pipeline had its problems in the beginning but is performing very well now and we expect this acquisition of assets will help complete our long term development plan for Arete," stated Charles Gamber CEO of Arete Industries, Inc.
