Denver-based explorer Voyager Oil & Gas Inc. on Tuesday agreed to buy a unit of Australia’s Emerald Oil & Gas NL in a deal that would create a U.S.-based Rocky Mountains operator focused on established and emerging unconventional oil and natural gas plays.
Voyager agreed to acquire, in exchange for 19.9% of its common stock (11.6 million shares), 100% of subsidiary U.S.-based Emerald Oil’s equity and assume $19 million of debt. Voyager shareholders would own 80% of the combined company, to be named Emerald Oil, with Emerald Australia owning 20%.
Shares of Billings, MT-based Voyager on Tuesday morning were trading up almost 7% (12 cents) at around $1.89.
“The untapped oil and gas reserves in the western United States have reshaped the North American energy markets,” said Emerald Oil Chairman McAndrew Rudisill. “The combination of Voyager and Emerald Oil underscores our commitment to developing an operated U.S. shale oil company.”
The combination of the assets includes a basket of properties in the Williston Basin’s Bakken/Three Forks Formation, the Denver-Julesburg (DJ) Basin in the Niobrara Formation, as well as the emerging Sandwash Basin in the Niobrara and the Heath Shale in Montana. Added to the oily properties is the emerging Tiger Ridge natural gas play in Montana.
The merged company, to be headquartered in Denver, “accelerates our strategy of using our position in the Williston Basin to create a company focused on Bakken and Three Forks development, two of the most prolific and extensive shale oil plays in the U.S.,” said Rudisill.
Voyager CEO J.R. Reger, who would serve as executive chairman of the merged company, said the combined acreage would provide “a strong foundation upon which to drive company growth.”
The Bakken leasehold includes 43,500 net acres in Dunn County, ND. Close to 6,900 net acres would be operated, while 6,800 net acres would be nonoperated but “available for conversion to operated…” Another 29,800 of nonoperated net acres are in the North Dakota counties of Williams, McKenzie and Mountrail, as well as Richland County, MT. Another 2,400 net nonoperated acres are in the DJ Basin of the Niobrara.
In a relatively new prospect, the Sandwash Basin, the combined company would hold 45,000 net acres in Colorado’s Moffat and Routt counties, and in Carbon County, WY. It also would have 45,000 net acres of nonoperated leasehold, which may be available for joint ventures.
In Montana’s Heath Shale, the company would prospect about 33,500 net acres in Mussleshell, Petroleum, Garfield and Fergus counties. About 13,700 net acres are operated, while the rest are nonoperated.
Rounding out the merged assets is the Tiger Ridge gas play, where Emerald Oil would have access to 74,700 net operated acres in Montana’s Blaine, Hill and Chouteau counties. Devon Energy Corp. “is the most active offset operator” in the gas play today, the companies said.
The management team and directors would own close to 9% of the combined company. Emerald Oil CEO Mike Krzus would take over as CEO of the merged company, while Rudisill, now chairman and president of Emerald Oil, would serve as president. Emerald Oil CFO Paul Wiesner would continue to serve as financial chief, while Voyager CFO Mitch Thompson would become chief accounting officer. Karl Osterbuh would serve as vice president of exploration and business development, and Voyager Executive Vice President Marty Beskow would become vice president of finance and capital markets.
The boards of both companies have approved the transaction. Once the deal is completed, Voyager’s ticker symbol on the New York Stock Exchange is to become EO.
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