The sale will leave the Company with approximately A$5m in cash as well as its Newkirk project in Oklahoma. Newkirk covers over 4,000 net acres and has certified Proven and Probable reserves of 5.1 million barrels of oil equivalent (as detailed in the announcement released to the ASX on dated 27 November 2015).
The Company first acquired an interest in the Capitola Oil Project in 2014 and subsequently suspended the development programme in 2015 due to declining oil prices and overall poor production performance from the four wells drilled by Pryme. As a result of inactivity, the Company's interest in the Project at the time of sale had reduced to a 37.5% WI in the shallow rights of the undeveloped acreage (25% WI in the deep rights). Many of the leases are also due to expire during 2016. Current production from Capitola totals approximately 100 BOE/day.
A review by the current Board concluded that the Capitola asset has limited potential to generate any meaningful value for shareholders and, as such, the Board considered that it is in the best interests of the Company to sell it. Cash reserves generated from the sale will be deployed to other projects where the potential for creating shareholder value is greater.
The book value of Capitola prior to Pryme's December 31 2015 financial year end impairments of US$3.5m, was US$5.6m.
The board of Pryme will continue its assessment of the Company's existing assets as well as new opportunities, in order to restore shareholder value.
About Indago Energy Ltd
Indago Energy Ltd (ASX:INK) (OTCMKTS:POGLY) is an Australian listed company engaged in oil and gas exploration, development and production. Indago's project portfolio includes liquid rich producing assets together with substantial oil development and exploration acreage in the United States.
The Company's Exploration and Production focus is on high growth oil and gas projects offering scalability of production, cash flows and reserves. Indago currently has several producing projects together with a significant acreage position. The Company's immediate focus is the development of its Capitola Oil Project located in an active region of the Cline Shale resource play along the Eastern Shelf of the Permian Basin, Texas. The project's core development and exploitation opportunities are shallower multiple "stacked" sandstones and limestones to depths of 7,000 feet which are effectively produced from vertically drilled wells. Indago's value driven model is executed through exploiting shallower, well defined intervals with advanced completion and stimulation technology within known produced oil fields together with exposure to the emerging Cline Shale resource play.
Indago's shares are publicly traded on the Australian Securities Exchange (ASX ticker: INK) and also as American Depositary Receipts on the OTCQX (ADR ticker: POGLY).
Indago Energy Ltd