Empire Energy Group Ltd (ASX:EEG, OTC:EEGUF) has banked US$5.9 million from the sale of its oil & gas assets in the Appalachian region of the US to PPP Future Development, Inc for total proceeds of up to US$9.1 million.
The sale of Empire Energy E&P LLC, which is the operating entity for all of Empire’s US oil & gas assets, has been completed with upfront cash proceeds of US$5.9 million received and Empire is now a pure-play Beetaloo/McArthur Basin player.
Loan repaid in full
This has enabled Empire to repay in full the existing US Macquarie Bank loan of ~US$4.6 million.
The sale price of up to US$9.1 million includes the upfront payment and further contingent payments of up to US$2.3 million depending on future gas prices up as well as deferred solar payments of US$900,000.
Post-completion Empire will have US$2.2 million in cash will be available to support the development of its assets in the Beetaloo Basin of Australia’s Northern Territory.
3.75% carried working interest
Importantly, the company will retain exposure to the shale formations below Empire E&P’s New York State conventional producing oil & gas wells by way of a 3.75% carried working interest with negligible holding costs. This applies to all formations below the base of the Medina Sandstone formation.
Empire’s managing director Alex Underwood said: "The Empire team is delighted to have successfully executed its US asset divestment program.
"Empire will be a pure-play Beetaloo/McArthur Basin-focused developer while retaining a free-carried interest in shale rights in the United States at little to no cost to shareholders.”
Full focus on Beetaloo Basin
He added: "In 2018, Empire was carrying US$38 million of debt against its US assets, supported by only US$4 million of EBITDA to service that debt. Empire sold its Kansas assets in 2019 which reduced the US debt, and this transaction results in full repayment of the US debt and return of over US$2 million in cash to support Empire’s Beetaloo-focused strategy.
"Empire’s board and management thank our US employees for their loyal service over the years and we wish them the best.
"Empire can now focus its full attention on the development of the world-class Beetaloo Basin, which in the success case will provide the people of the Northern Territory with sorely needed energy security and employment, royalty income to the Northern Territory Government, deliver large volumes of gas into the chronically undersupplied Australian East Coast market, and provide energy security for the broader Asian region via LNG export.”