With the prospect of higher natural gas prices in the near-term dwindling, junior producer Samson Oil & Gas Ltd. said Friday it will sell most of its domestic gas projects and turn its attention to domestic oil-weighted holdings.

The producer, which is headquartered in Australia with offices in Denver, holds oil and gas leases across the Uinta Basin of Wyoming, in the Bakken Shale, in the Permian Basin of New Mexico and on the Gulf Coast of Texas. Samson’s previous business strategy was to create value by “focusing on the U.S.A. energy sector and in particular exploration for and production of gas,” according to its website.

The board of directors approved the gas asset sale, expected to take place toward the end of this year, following a three-day strategy meeting late last month. Samson warned that the sale would result in a tax loss for the company, but “the tax loss generated from the sale of existing gas assets will depend on the ultimate sale price of the assets.”

Samson said it would use “its considerable in-house capability to generate quality prospects and selectively pursue the development of a prospect portfolio in the onshore Gulf Coast Basin.

“The company’s board of directors holds the view that existing natural gas producers in the United States have the assets and resources to react quickly enough to meet any short-term increase in demand, making it likely that gas prices will remain low in the short term,” Samson stated.

“Therefore, In light of the current and prospective commodity price, Samson’s near-term gas drilling will be restricted to the Diamondback well, which is due to spud in November. At current gas prices Diamondback remains an attractive investment but Samson’s development focus will remain on its two oil projects” in the Bakken and Niobrara plays.

The Diamondback and the related Ripsaw prospects are in the Frio and Yegua formations in Southeast Texas in Jefferson and Grimes counties. Each prospect is estimated to hold between 1 Bcf and 2 Bcf.

“Notwithstanding its plan to defer drilling gas wells at this time, because existing 3-D seismic data can be acquired for such properties cheaply in the current pricing environment, Samson will be looking for opportunities to develop a quality prospect inventory.”

According to Samson’s fiscal year 2010 financial statement for July 1, 2009 to June 30, the producer achieved a net profit of $817,233, compared with a loss of $3.2 million in the prior year. Samson also reported a 25% increase in oil production but said gas output was down 2% to 0.668 Bcf from 0.684 Bcf.

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