Jericho Signs a Definitive Agreement Building on Previous Oklahoma Acquisitions
VANCOUVER, BC and TULSA, OK, Nov. 23, 2015 – Jericho Oil Corporation (“Jericho” or the “Company”) (TSX-V:JCO; OTCQX:JROOF) announces that it has signed a definitive agreement to acquire a 50% working interest in producing wells and drillable leaseholds in Central Oklahoma for a total cash consideration of USD$6.50 million. The asset package is in an area complementary to Jericho Oil’s existing operations in Oklahoma and represents the Company’s fourth announced acquisition within Central and Northeast Oklahoma in 2015.
Central Oklahoma Acquisition Highlights (1):
- Jericho Oil acquires 50% average working interest and will assume operatorship upon closing
- The Central Oklahoma asset is comprised of ~50 producing wells and 30,000 net acres
- Reserves are ~90% Proved Developed and ~80% Oil
- Reserve-to-production ratio of ~8.5 years
- Net Proved Developed Producing reserves of ~1.25 MMboe (625m net boe to Jericho’s interest) acquired at ~$10.08 per barrel
- Average 3Q15 net production of 427 boepd (213 net boepd to Jericho’s interest) acquired at $30,458 per flowing Boe
- Increases Jericho’s production by 225%
- 88% Oil, 12% Gas
- Oil production priced at an LTM differential to WTI of ~$3.25/bbl
(1) Based on third-party reserve estimates and preliminary internal assumptions
The acquisition is located in Seminole, Pottawatomie, Lincoln and Payne County across five contiguous land packages. The Central Oklahoma acreage spans a highly prolific region with prospectivity in high-quality source rocks (e.g., Woodford Shale) and multiple productive reservoirs including, but not limited to: Hunton, Mississippi Lime, Red Fork and Skinner. The majority of the acquired production is located in the ‘Searight’ and ‘Oaktree’ fields which produce out of the Hunton and Red Fork, respectively. Within the Searight field, there are five recently completed horizontal Hunton wells which had an average peak daily rate of 342 boepd.
The year-long stress on the market has allowed Jericho the opportunity to capitalize on the large sunk costs, exploration efforts and experiences of previous development. In an environment of generally lower prices, favorable operating economics and unfavorable drilling economics are mutually exclusive. While the Central Oklahoma region has struggled to maintain its place as the “next horizontally drilled play,” the operating economics on the acquired wells remain extremely compelling. Of importance, Jericho continues to acquire profitable production with only small incremental G&A costs, allowing the same amount of resources to manage a growing production and acreage base.
Ryan Breen, Director of A&D, said, “Amid the precipitous drop in the price of oil, credit availability has become scarce. As a result, capital flight, evidenced by the declining rig count in the Mid-Continent region year-over-year, has produced illiquidity, and most importantly, market dislocations in regards to the long-term intrinsic value for both cash flow positive and highly distressed assets alike. This Central Oklahoma acquisition demonstrates our commitment to acquiring high-quality assets that have generally been burdened by distressed corporate capital structures with positive cash flow and future drilling potential at appreciable discounts to their long-term value.”
The acquisition is subject to customary post-closing adjustments and is expected to close in December 2015, with an effective date of October 1, 2015.
About Jericho Oil Corporation
Jericho is focused on growth through consistent, predictable and repeatable high margin conventional oil production by bringing new and proven technology to legacy, onshore basins in the U.S. Jericho has acquired or has agreed to acquire a 50% interest in 48,100 acres and 736 gross BOEPD in the Mid-Continent and is actively seeking additional properties in the region. For more information, please visit www.jerichooil.com.
Cautionary Note Regarding Forward-Looking Statements
This news release includes certain “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and Canadian securities laws. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual events and results to differ materially from Jericho’s expectations include risks related to the exploration stage of Jericho’s project; market fluctuations in prices for securities of exploration stage companies; and uncertainties about the availability of additional financing.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Director, Investor Relations
Director, Corporate Communications