Paid around $500 an acre, not sure the burden which will impact the cash paid:
Ring Energy(REI) said Monday that it has acquired approximately 33,000 undeveloped acres in Gaines County, Texas, for approximately $16.6 million. The company will fund the transaction using the remaining proceeds from its December stock offering.
Ring Energy(REI)
Re: Ring Energy(REI)
Comments below from John White at Roth Capital:
Our target price for Ring Energy (REI) is $18.50, and we reiterate our Buy rating.
REI announced today that it has acquired approximately 33,000 undeveloped acres in Gaines County, Texas, for an approximate purchase price of $16.6 million, at approximately $500/acre. REI will fund the acreage purchase with cash on hand received from the December 2016 public stock offering. We view the transaction as favorable.
The entire acreage is located in an area that REI is targeting with its horizontal drilling and development program, with more than 50% of the 33,000 acres contiguous to REI’s existing Central Basin Platform (“CBP”) leases. We refer to this area and play as the Hz San Andres. The purchased acreage has a 100% working interest and a net revenue interest of 75%.
In the past 12 months REI has grown its acreage position in this area from 8,000 net acres to over 63,000 net (87,000 gross) acres, representing over 600 net (825 gross) potential horizontal drilling locations.
The progress REI is making on its Hz San Andres seems non-stop. On 4/5/2017, REI provided an operations update which was positive, in our opinion. In that press release, REI provided updated information on five recently completed wells that had 24 hour initial production (IP) rates ranging from 377 BOE per day to over 800 BOE per day with an average of 660 BOE per day. This compares very favorably with the first three horizontal wells drilled in late 2016 and exceeded our expectations.
Our target price for Ring Energy (REI) is $18.50, and we reiterate our Buy rating.
REI announced today that it has acquired approximately 33,000 undeveloped acres in Gaines County, Texas, for an approximate purchase price of $16.6 million, at approximately $500/acre. REI will fund the acreage purchase with cash on hand received from the December 2016 public stock offering. We view the transaction as favorable.
The entire acreage is located in an area that REI is targeting with its horizontal drilling and development program, with more than 50% of the 33,000 acres contiguous to REI’s existing Central Basin Platform (“CBP”) leases. We refer to this area and play as the Hz San Andres. The purchased acreage has a 100% working interest and a net revenue interest of 75%.
In the past 12 months REI has grown its acreage position in this area from 8,000 net acres to over 63,000 net (87,000 gross) acres, representing over 600 net (825 gross) potential horizontal drilling locations.
The progress REI is making on its Hz San Andres seems non-stop. On 4/5/2017, REI provided an operations update which was positive, in our opinion. In that press release, REI provided updated information on five recently completed wells that had 24 hour initial production (IP) rates ranging from 377 BOE per day to over 800 BOE per day with an average of 660 BOE per day. This compares very favorably with the first three horizontal wells drilled in late 2016 and exceeded our expectations.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group