Norwegian gas driller Norse Energy has sold off some of its leased acreage in Central New York State, along with a slice of future royalties in acreage for which it retains control. The complicated deal to an unnamed buyer for $26.7 million is to sell all interests in 22,700 acres, and various rates of royalty interests on other leases that Norse retains (see the press release below).
Norse will retain control of 160,000 leased acres in New York, of which 110,000 acres are located in the Marcellus and Utica Shale play areas, in the hope that New York will soon release final drilling rules that will allow it to tap into shale gas in the state.
From the press release:
Norse Energy Corp. ASA announces that it has entered into a definitive agreement to sell acreage and overriding royalty interests for cash consideration of USD 26.7 million to undisclosed and unrelated buyers.
Norse is selling leases and fee interests totaling approximately 22,700 acres in Central New York and overriding royalty interests of (i) 2.5% on 24,300 acres that are held by production ("HBP") in Central New York; (ii) 3.75% on 84,000 non-HBP leased and fee acres located in Central New York; and (iii) 6.25% on 33,000 acres located in Western New York.
Not included in this transaction are the Company’s proved reserves, including those reserves in the Herkimer Formation.
Upon closing, Norse received USD 21.7 million as the first installment. The remaining cash consideration of USD 5 million will be held in escrow to allow the buyers adequate time to conclude confirmatory due diligence, whereupon the remaining funds will be disbursed to Norse no later than March 31, 2012.
“This transaction represents an important first step in providing liquidity for the company and reflects renewed interest in our New York acreage,” commented Norse CEO Mark Dice. “Norse remains hopeful that the SGEIS approval process will be complete so that development of our significant shale resources can commence in 2012,” concluded Dice.
Following this sale, the Company retains a significant land position of approximately 160,000 net acres in New York State of which approximately 110,000 net acres are in the Marcellus and Utica shale fairway in Central NY.*
*Norse Energy Press Release (Jan 2, 2012) – Norse Energy Corp ASA: Norse Announces Definitive Agreement to Sell Acreage & Overriding Royalty Interests for Proceeds of USD 26.7 Million