US Energy to acquire producing assets in deal valued at $99.5 million

US Energy Corp., Houston, has agreed to purchase certain oil-weighted assets from Lubbock Energy Partners LLC, Synergy Offshore LLC, and certain entities controlled by Sage Road Capital LLC in a deal valued around $99.5 million.

The assets acquired represent a conventional portfolio of operated, producing, low decline oil-weighted assets across the Rockies, West Texas, Eagle Ford, and Mid-Continent, US Energy said in an Oct. 5 release.

The deals would increase estimated average daily production 377% to 1,814 boe/d from 380 boe/d to (July 2021 average) and increase July’s estimated internal PDP reserves 311%.

Ryan Smith will continue as chief executive officer and John Weinzierl, an owner of one of the sellers, will join the board of directors. Weinzierl is a co-founder of Memorial Resource Development LLC and former partner with NGP Energy Capital Management. The board will increase to seven members from five, initially comprised of three directors designated by the sellers, including Weinzierl as chairman, Duane King, and a designee from Sage Road Capital, and four legacy directors from US Energy, including Smith.

The deals are expected to close in this year’s fourth quarter, subject to customary closing conditions and regulatory approvals, including the approval of US Energy stockholders.

US Energy will issue 19,905,736 shares of common stock, pay $1.25 million cash, and assume $3.3 million in debt from the sellers. Upon completion of the transactions, the sellers will own about 80.8% and existing US Energy shareholders will own about 19.2% of the company’s outstanding common stock.