Armada Oil, Inc. an emerging independent oil and gas company, announced an important 1,000+ net acre addition to its existing 25,000 acres under control. Strategically situated near existing infrastructure in Carbon County, Wyoming, the 26,000 acre project footprint marks Armada Oil's ongoing efforts to secure contiguous land and expand in a region where the emergence of new oil completion technologies has spurred heightened activity and growing interest. Armada Oil has a 100% working interest in the additional acreage.
"While the full potential of the liquids-rich Niobrara is still being discovered, numerous majors -- including Anadarko Petroleum, EGO Resources, Marathon Oil, and Noble Energy -- are now working to increase their acreage positions. I'm pleased that we have been among the first to arrive, secure a meaningful position, and undertake a quality technical program," explained Armada Oil President and CEO, James J. Cerna.
Today's news of expanded acreage follows on the heels of Armada Oil's recently announced plans to accelerate oil exploration in the Niobrara with a 3 dimensional (3-D) seismic survey of approximately 41.05 square miles (26,272 acres) in and around Southern Wyoming's Laramie and Hanna Basins. Armada Oil entered into a geophysical data acquisition agreement with Geokinetics USA, Inc. to undertake the work.
"This expansion and technical work demonstrates our serious commitment to pursuing the potential of the Niobrara, an unconventional play like the Bakken, Eagleford and others, that has the potential to make America energy independent. The advent of horizontal drilling with new completion techniques is still in its infancy in terms of unlocking unconventional resources," explained Mr. Cerna.
In addition to Armada Oil's ongoing efforts to expand and exploit its Niobrara acreage, management has undertaken plans to leverage producing assets in Louisiana by way of a recently proposed business combination with Mesa Energy Holdings, Inc.
Armada Oil and Mesa Energy announced last week that the companies have entered into a non-binding letter of intent in order to pursue a business combination. The closing of the transaction is subject to further due diligence, negotiation and execution of definitive agreements, as well as necessary consents and approvals. The Board of Directors of both Armada Oil and Mesa Energy have unanimously approved the key terms of the proposed transaction and have authorized their respective management to pursue the transaction.
Management of the companies believes that this contemplated transaction has several benefits:
- It would bring together a sound, proven management team with both operational and public company experience;
- Strong conventional, producing assets would provide cash flow and an underlying value to combined shareholders;
- A low-cost entry into the Niobrara play with multiple underlying conventional prospects would leverage the combined company to significant upside;
- The combined company would also have an attractive foothold in the Mississippi Lime play in Oklahoma; and
- The combined company would have critical mass to help raise capital efficiently, facilitate liquidity and spur rapid growth, thereby creating a solid platform to recognize value for shareholders.
The terms of the letter of intent are non-binding and subject to change. C. K. Cooper & Company is serving as financial advisor on the transaction. It is the goal of both Armada Oil and Mesa Energy to close this anticipated transaction by the end of this year.
The completion of the described transactions is conditioned on, among other things, the parties being satisfied with the results of their respective due diligence, each party obtaining all required consents and approvals, including all legal and regulatory approvals and all applicable shareholder and board of directors approvals and any necessary approvals from third parties, agreement on all final terms and conditions and negotiation of definitive agreements, and there having occurred no material adverse change in the business or condition, financial or otherwise, of either party. Armada Oil and Mesa Energy can provide no assurances that these conditions will be satisfied. Management cautions investors against making investment decisions based on any expectation that the proposed transaction will be consummated, because, in its view, such expectations are speculative.