You are here:   HomeNews Releases Permex Petroleum Corporation Announces New Strategic Acquisition and Alignment with World Class Large Cap Operator on West Texas Field

VANCOUVER, June 5, 2018 /CNW/ - Permex Petroleum Corporation ("Permex" or the "Company)" (CSE: OIL) is pleased to announce that it has signed a Purchase and Sale Agreement ("PSA") with Energy Properties 2000-1 LLC ("Energy Properties" or "Seller"), a partially owned company of Wilbanks Reserves Corporation ("Wilbanks"), for the purchase of all the Seller's rights, title and interest in the ODC San Andres Unit and W.J. "A" Taylor lease (the "Assets") located in Gaines County, Texas.  

Permex will also become the operator for the property; the other major working interest partner on the field with Permex will be Occidental Petroleum Corporation ("Occidental") (NYSE: OXY), an international oil and gas exploration and production company with operations in the US, Middle East and Latin America with a market capitalization of approximately $65.19 Billion as of the date of this release.   

The property is just under two contiguous sections for a total of 1,220 gross acres, all held by production ("HBP") with all rights and no depth restrictions in the Central Basin Platform of the Permian Basin. There is a total of 52 vertical wells of which 26 are producers, 21 are injection wells, 4 are shut in wells, and one is temporarily abandoned.

The field currently has a gross daily production of 158 barrels of oil per day and 13 thousand cubic feet of gas per day from the San Andres and Devonian formations. In management's opinion, significant additional formations below the current production zones exist; these include but are not limited to the Glorieta, Abo, and the highly sought after Wolfcamp. There are also additional up-hole formations above the current producing zones available on the field for further testing, which include but are not limited to Yates, 7 Rivers, Queen, and Grayburg. Permex has retained an independent engineering firm to further evaluate the reserves attributable to the property beyond the proved developed producing reserves identified pursuant to an internal engineering study conducted by Wilbanks, which evaluation will also consider any proved developed non-producing, proved undeveloped, probable and possible reserves attributable to the property.

Permex will take over 41.4% working interest with a 34.7% net revenue interest and an additional 0.006% overriding royalty interest with 0.21% royalty interest in the ODC San Andres Unit. Permex will also take over 48% working interest with a 41.51% net revenue interest and 0.083% royalty interest in the W.J. "A" Taylor lease.  Under the terms of the PSA, the Company is acquiring the assets for a total purchase price of approximately US$1.95M in cash, which also includes over US$1.2M in equipment on the field and the yard within the lease.

This acquisition is in line with Permex's strategy of acquiring and developing high-quality assets with outstanding economics in the Permian Basin.  "This acquisition represents a significant milestone for us," said Mehran Ehsan, President, Permex Petroleum Corporation. "Providing us with access to a truly high-quality oil and gas field and immediate production to accelerate and execute our business plan to scale the Company. In addition, it gives us an opportunity to work side by side with one of the largest oil and gas producers in North America. We plan to continue operations, design a comprehensive frac re-entry program to submit to Occidental through an "Authority for Expenditure" for approval, as well as review the acreage for additional drilling into the San Andres formation as spacing allows."

Some of the offset operators to this property include Occidental Petroleum (NYSE: OXY), Devon Energy (NYSE: DVN), Hess Corporation (NYSE: HES), Fasken Oil and Ranch.