Ron Minsky, Chairman and CEO of Metawells Oil and Gas Inc., announced that South Plains Petroleum, Inc's Board of Directors voted unanimously to accept the Corporate Combination Agreement to reorganize and combine the two Companies.
Joe D'Amico, Chairman and CEO of South Plains Petroleum, Inc., (www.southplainspetroleuminc.com) who recently joined the Board of Metawells, reported that the committee of independent South Plains' Directors appointed to review the draft combination agreement gave a compelling report on the benefits of the combination at their regularly scheduled Board meeting on Tuesday, February 4th, and the Directors gave their 100% assent to completing the contemplated transaction as soon as possible.
The transaction will consist of an exchange of Metawell's shares 1.5 to 1 for South Plains' shares, simultaneously with an uplist of the combined Companies to NASDAQ, accompanied by a name change to South Plains Petroleum and a trading symbol change. Minimum initial share price for NASDAQ qualification is $4.00.
South Plains' by-laws contain an annual dividend provision based on the price of oil over $60 and gas over $3 at which time the Company escrows 5% of the price it receives for dividends to shareholders.
South Plains has multiple properties in both the Eastern Permian Basin of Texas and onshore Louisiana near the Gulf with significant proven oil and gas reserves awaiting development.
The most exciting feature of their main oilfield, centered on the Swenson Ranch north of Abilene, TX, is that the areas of pay are less than 3,000 feet deep and have already produced over 2.6 million barrels of oil. South Plains' in-house and third-party estimates of the Company's over 5 square miles of contiguous leases producing, proved and probable reserves of 2.25 million to 2.5 million barrels of oil recoverable with a PV10 in excess of $27 million, exclusive of several pays that have produced on the property but were not evaluated. PV10 is the present value of future cash flows discounted by 10%.
On the Company's contiguous Welch lease which covers the same oil field there is an additional 800,000 estimated, recoverable barrels of oil with an additional PV10 of $20 million. These combined leases have approximately 45 development drill sites.
South of Abilene the Company has another proven field in the same type of reservoir at similar depth supporting 8 drill sites proven and probable reserves of 400,000 barrels of oil recoverable with a PV10 of $10 million.
The South Plains Louisiana properties are much deeper and are high pressure wells. Wells the Company owns and some they are targeting contain an estimated 18+ Billion Cubic Feet (BCF) of natural gas and 1.8million barrels of oil recoverable with an estimated PV10 of $35+ million.
The combined, conservative minimum value of these properties is $92,000,000.
