Pinnacle Gas Resources Inc., a junior explorer that focuses on coalbed methane (CBM) resources in the Rocky Mountains, has sold some undeveloped acreage and gas gathering assets in Wyoming for $3.2 million. Some of the proceeds will be used to pay down debt.
The company also announced the resignation of Chairman Steven A. Webster, who had been with the company since its inception in 2003.
Pinnacle sold its high-pressure gas gathering assets in the Cabin Creek area of Wyoming to Big Horn Gas Gathering LLC, the field operator. In addition, Pinnacle sold around 800 net undeveloped acres in its Arvada gas project in Wyoming to an undisclosed party. The acreage held no production and was not operated by Pinnacle. The company used a portion of the sales proceeds to reduce the amount borrowed under its existing credit facility to $9 million, which put it in compliance with the current borrowing base.
CEO Peter G. Schoonmaker said Pinnacle has been considering ways to raise cash and improve liquidity since last year.
"The sale of the Cabin Creek gathering system to the operator was in the best economic and strategic interests of Pinnacle," he said. "Moreover, the sale of a small piece of our nonoperated, undeveloped acreage provided immediate cash to Pinnacle with little opportunity cost. Our ability to remain in compliance with our credit facility borrowing base limitations in light of the current natural gas market provides Pinnacle with an opportunity to prepare itself for the next natural gas cycle and the opportunities that higher prices may eventually present the company."
The Sheridan, WY-based producer was trading for around 20 cents/share at midday Friday on the NASDAQ Stock Exchange. Besides some CBM holdings in the Powder River Basin of Wyoming and Montana, Pinnacle also has a leasehold in the Green River Basin in southern Wyoming. At the end of 2007 Pinnacle owned natural gas and oil leasehold interests in around 494,000 gross acres. The company had estimated net proved reserves of 25.7 Bcf, and it owned interests in 634 gross producing wells.
Replacing Webster as chairman will be current board member Thomas G. McGonagle, who joined the board of directors in August 2007. McGonagle was formerly a managing director and co-head of the U.S. Merchant Banking Group at Babcock & Brown LP. He also has been a managing director of the Financial Sponsors Group for Donaldson, Lufkin & Jenrette.
Intelligence Press Inc. All rights reserved. The preceding news report
may not be republished or redistributed, in whole or in part, in any
form, without prior written consent of Intelligence Press, Inc.