EnerJex Resources Inc. has agreed to acquire privately held Black Raven Energy Inc., a Denver-based company with more than 75,000 net acres leased in the Denver-Julesburg (DJ) Basin.
Following the merger, the combined enterprise will be a Midcontinent-focused independent oil and natural gas exploration and production company with a deep inventory of low-risk drilling opportunities and exposure to emerging unconventional oil resource plays through its sizeable acreage footprint in the DJ Basin, EnerJex said.
Black Raven has 45,000 net acres in the DJ Basin that are held by production out of its 75,000 net acre position. As recently as last summer, Black Raven held 178,000 net acres in the basin, placing it among the top acreage holders in the basin (see Shale Daily, Aug. 15, 2012). Company assets are focused in two core projects located on trend with emerging unconventional oil resource plays, EnerJex said.
In the Adena Field Black Raven owns a 100% working interest in 19,000 acres in Morgan County, CO, covering the vast majority of Adena Field, which has been held by production since it was unitized by the Union Oil Co. of California (Unocal) in 1956. According to the Colorado Oil and Gas Conservation Commission, Adena is the third largest oil field in the history of Colorado behind Rangely and Wattenberg, having produced 75 million bbl of oil and 125 Bcf of natural gas, EnerJex said. Nearly all of the producing wells in the Adena Field were temporarily abandoned or shut-in during the secondary recovery phase in the mid-1980s when oil prices collapsed, and only a small number of wells have been produced since that time.
Black Raven currently produces 250 gross bbl of oil and natural gas (68% oil) per day from 8 J-Sand wells and 7 D-Sand wells in this field at a depth of 5,500 feet.
Black Raven's Niobrara project covers more than 55,000 net acres primarily in Phillips and Sedgwick counties, CO, and Perkins County, NE, of which 25,000 acres are held by production and more than 15,000 acres expire after 2015.
Black Raven's Niobrara acreage was high-graded based on structural features identified through analysis of 114 miles of 2D and 165 square miles (105,000 acres) of 3D seismic data on its original position of 330,000 net acres. The company has identified more than 150 high-ranked Niobrara drilling locations on its existing acreage based on 3D seismic analysis, which has historically yielded success rates of 90% in the play, EnerJex said. "Black Raven's acreage is well situated with direct access to to the Cheyenne Hub market and immediate proximity to the 1,679-mile Rocky Mountain Express pipeline and the 436-mile Trailblazer pipeline," the company said.
Black Raven is majority-owned by West Coast Opportunity Fund LLC (WCOF), which currently owns 16% of EnerJex and will own 46% of the post-merger company on a diluted basis. Affiliates of WCOF own 24% of EnerJex and will own 15% of the post-merger company on a diluted basis.
Each share of Black Raven common stock will be converted into 0.34791 of a common share of EnerJex, subject to certain adjustments, resulting in Black Raven stockholders owning about 37% of the post-merger Company on a diluted basis.
San Antonio, TX-based EnerJex is a domestic onshore oil company with assets in eastern Kansas and South Texas. The company's El Toro Project is in Atascosa and Frio counties in Texas, just south of San Antonio. As of Dec. 31, the company owned an average working interest of 46% in 3,435 acres. The company's Mississippian Project is located in Woodson and Greenwood counties in southeast Kansas, where it owned a 90% working interest in 3,000 acres as of Dec. 31. EnerJex's Cherokee Project is in Miami and Franklin counties in eastern Kansas, where the company owned an average working interest of 85% in 10,295 acres at the end of last year.