Alta Mesa Holdings has entered into an agreement to sell certain oil and gas producing properties in the Eagle Ford Shale area to ReOil Eagle I, LLC for a total potential price of $210 million, subject to customary purchase price adjustments. Alta Mesa will initially be paid $175 million, with an additional $25 million to be paid contingent upon the drilling of ten upper Eagle Ford Shale wells, and $10 million if the Calendar Year 2016 NYMEX strip closes above $80 per barrel for two consecutive months in 2015. The transaction has an effective date of September 1, 2014. At year end 2013, the reserves associated with these properties (adjusted for the March 25, 2014 partial divestiture to Memorial Production Operating LLC) were 7.3 million barrels of oil equivalent, with 9% of the volumes classified as proved developed, with $218 million dollars of value on the SEC price deck. The properties are non-operated, are primarily located in Karnes County and consist of all of the remaining interests that Alta Mesa has in this area. The effect of this transaction on the company's borrowing base is yet to be determined. The closing is expected in mid-January and subject to normal and customary closing conditions including approval of the transaction by Alta Mesa's Board of Directors.
"We are pleased to be working with ReOil on this transaction and look forward to continuing our relationship with them," stated Hal Chappelle, Alta Mesa Holdings President and CEO. "This strategic divestiture sharpens our operational focus."