DALLAS--(BUSINESS WIRE)--Armada Oil, Inc. (the “Company”) (OTCBB:AOIL), an oil and gas exploration and production company, today announced that, as a part of its asset reallocation strategy, the Company recently completed the acquisition of 100% working interest in six producing oil and gas leases covering approximately 1,040 acres in the Vernon Field in Woodson County, Kansas. There are currently 125 shallow wells, some of which are shut in pending maintenance or recompletion work while a number of others are used as pressure maintenance water injection wells. Current production is approximately 80 barrels per day.
We believe that the existing shallow well field provides stable, low decline, long life production with low operating costs and the potential for the drilling of over 150 additional wells with a very low risk of dry holes. Due to the expected long life of the production and reserves, drilling of additional shallow wells can be expected to provide an outstanding return in the form of a booked Proved Developed Producing (PDP) reserve value per well that is almost five times the cost of drilling and completing the well. That is a much more favorable ratio than with almost any drilling program in the industry, including the popular unconventional plays. In addition, all depths are held by production and there is additional potential in the Mississippian Limestone as well as in the Viola Limestone, both of which are at depths of less than 2,500 feet. There is also water-flood potential in the currently producing zone.
Evaluation of the assets is underway and the Company expects to formulate and implement a development plan for the upgrade and enhancement of the existing wells as well as for drilling of additional wells over the next few months. New wells can be drilled, completed and producing in a matter of days.
“This acquisition represents a significant step forward in our current asset reallocation strategy. The expected long life production in this field and the ability to significantly increase PDP reserves at a low cost with almost no risk of dry holes provides a solid platform from which to expand into additional opportunities. We are pleased to be taking this step and, subject to the availability of additional capital, look forward to the drilling in 2014 of multiple wells in Kansas as well as the initial test well in our Niobrara operating area in Wyoming,” said Randy M. Griffin, CEO of Armada Oil, Inc. “We are currently in discussions with a number of potential capital sources and expect to announce new financing initiatives soon,” he added.
The effective date of the acquisition was March 1, 2014 and the purchase price of $6.5 million was partially funded out of the closing of Tranche B of the recently completed asset reallocation financing transaction with Gulfstar Resources. For full disclosure of the Gulfstar transaction and this acquisition, please refer to Armada Oil’s Form 8-K and 10-K filings with the SEC which are available for review at www.sec.gov and on the Company’s corporate website www.armadaoil.us.
About Armada Oil, Inc.
Armada Oil, Inc. (OTCBB: AOIL), headquartered in Dallas, Texas, is a growth-oriented oil and gas Exploration and Production (E&P) company with a focus on growing reserves and net asset value per share, primarily through the acquisition, development and enhancement of multiple onshore oil and natural gas producing properties as well as the development of highly diversified developmental drilling opportunities, both conventional and unconventional. The Company currently has producing oil properties in Plaquemines and Lafourche Parishes in Louisiana and in Woodson County, Kansas. In addition, the Company has developmental properties in Garfield and Major Counties, OK and Wyoming County, NY and controls a strategic acreage position in southern Wyoming in the liquids-rich Niobrara Play.
More information about Armada Oil may be found at http://www.armadaoil.us.
Forward-Looking Statements
Certain statements in this news release, which are not historical facts, are forward-looking statements. These statements are subject to risks and uncertainties. Words such as "expects", "intends", "plans", "may", "could", "should", "anticipates", "likely", "believes" and words of similar import also identify forward-looking statements. Forward-looking statements are based on current facts and analyses and other information that are based on forecasts of future results, estimates of amounts not yet determined and assumptions of management. Actual results may differ materially from those currently anticipated due to a number of factors which may be beyond the reasonable control of the Company, including, but not limited to, the Company’s ability to locate and acquire suitable interests in oil and gas properties on terms acceptable to the Company, the availability and pricing of additional capital to finance operations and leasehold acquisitions, the ability of the Company to build and maintain a successful operations infrastructure, the Company’s ability to integrate acquired assets, the intensity of competition and changes and volatility in energy prices. Readers are urged not to place undue reliance on the forward-looking statements, which speak only as of the date of this release. We assume no obligation to update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this release. Additional information on risks and other factors that may affect the business and financial results of the Company can be found in the filings of the Company with the U.S. Securities and Exchange Commission at www.sec.gov.
