Baron Energy Acquired Significant Producing Properties

Source: 8/4/2014, Location: North America

Baron Production LLC, a wholly-owned subsidiary of Baron Energy, Inc, an independent oil and gas company based in San Marcos, Texas, recently closed a significant acquisition in South Texas with an effective date of July 1, 2014. Funding was provided by Petro Capital Energy Credit, LLC, Dallas, Texas ("Petro Capital"). Overton Capital, Corp., Dallas, Texas, acted as exclusive financial advisor to the Company.

Management Comments
Ronnie L. Steinocher, Chairman, President and CEO, said, "We are extremely pleased to have closed on this acquisition after more than eight months of continuous work including due diligence and securing funding. This completes our major goal for 2014 to acquire an anchor project with upside to provide Baron with substantial future growth opportunities."

Mr. Steinocher added, "This acquisition increases our anticipated consolidated revenue tenfold to approximately $425,000 per month and provides the means to further increase revenue over the next 12 months by drilling new horizontal wells. These properties, located in Frio County, Texas, include 8,082 acres, 8 producing leases, with 75% HBP, gross production of 204 BOPD and 180 MCFPD from 14 producers, and have a drilling inventory of new wells and recompletions for up to five years. Baron Production owns 89.1-100% working interest (65.9-74% net revenue interest) in the acquired properties. All of the properties are operated by Baron. Funding for phase-one of the drilling program is included as part of Petro Capital's funding commitment; thereafter, future drilling should be sustained out of cash flow. Based on analogs, new horizontal wells in the Austin Chalk could result in initial production rates of 150-500 barrels of oil per day (BOPD) with 50,000 to 300,000 barrels of ultimately recoverable crude oil per well. The cost of this type of horizontal well is approximately $2.0-2.2 million to drill and complete with well depths of 5,300 feet and lateral lengths of 3,000-5,000 feet. Furthermore, a number of the acquired leases include high potential, deeper Eagle Ford Shale, Buda Lime, and Pearsall Shale formations which could add major future value, if successfully developed. "

"In summary, this is a significant acquisition for Baron. It provides a major increase in production, revenue, and reserves, a substantial platform for both near-term and long-term growth via the drill bit with multi-zone horizontal opportunities, and alignment with an energy capital provider. "

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