By the OGJ Online Staff
HOUSTON, Jan. 15 -- Delta Petroleum Corp., Denver, has agreed to buy all the US oil and gas properties of Castle Energy Corp., Radnor, Pa., for $20 million in cash and 9.6 million shares of Delta common stock.
The agreement does not include Castle's Romanian activities.
The deal is subject to Delta Petroleum shareholder approval, but closing is expected in April 2002. Each company is subject to penalty for failure to close.
The properties include 525 producing wells in 14 states plus associated undeveloped acreage, with proved reserves of 65 bcf equivalent of which 32 bcfe are producing. Production from the Castle properties will more than double Delta's production to 3,400 boe/d and triple proved producing reserves.
The cash portion of the purchase price will be reduced by the cash flow generated by the properties between Oct. 1, 2001, and the closing date of the transaction.
"We decided to sell our oil and gas properties for a substantial equity stake in Delta Petroleum because of Delta's significant undeveloped crude oil reserves, its potential to realize the value inherent in its federal leases offshore California, the opportunity to eliminate duplicative general and administrative costs and the fact that we can sell our domestic properties with only minor tax consequences at the present time," said Joseph L. Castle II, CEO of Castle Energy.
Delta may repurchase up to 3.2 million shares from Castle at $4.50/share for 1 year after closing.
Upon closing, Delta's four-person board will be expanded by three directors named by Castle.