Independent oil and gas producer U.S. Energy Corp. (NASDAQ: USEG) announced Tuesday morning that it has agreed to and closed an acquisition of the operated and non-operated producing assets of FieldPoint Petroleum for $500,000 in cash. Austin, Texas-based FieldPoint filed for bankruptcy protection in June, citing assets worth about $1.6 million and liabilities of up to $3.9 million. FieldPoint was delisted from the New York Stock Exchange in November 2017.
U.S. Energy is acquiring proved developed producing assets of approximately 237,263 barrels of oil equivalent, of which 63% is oil. At a 10% discounted value, the assets are worth about $2.5 million.
The oil portion of the acquired assets totals 150,000 barrels, implying a price per produced barrel of around $3.00. On an oil-equivalent basis, the price per barrel drops to $2.10.
In the second quarter, U.S. Energy produced 40,920 barrels of oil equivalent at a production cost of $822,000, or about $20 per barrel. In the non-COVID-19 second quarter of last year, the company produced about 73,400 barrels of oil equivalent at a production cost of $1.15 million, or about $15.70 per barrel.
U.S. Energy also signed a $375,000 secured promissory note with the company’s largest shareholder, APEG Energy II, which is controlled by U.S. Energy’s former CEO David Veltri. APEG owns approximately 42% of U.S. Energy’s outstanding shares. Proceeds from the note were used to finance the acquisition.
The assets acquired include about 21 wells, of which 14 are currently producing. An additional 500 net acres in New Mexico are held by production, a term indicating that as long as U.S. Energy meets certain minimal production goals, it will continue to hold the lease rights to the property.
After Monday’s merger between Devon Energy and WPX Energy lifted the energy sector as a whole with visions of consolidations at low premiums, U.S. Energy’s acquisition is lighting a fire under the company’s share price Tuesday morning. Unfortunately for the sector, the company is too small to have much impact beyond its own shares.
U.S. Energy stock traded up more than 200% at $13.04 early Tuesday morning, after closing at $4.30 on Monday evening. The stock’s 52-week range is $2.44 to $18.57, a high set shortly after the opening bell this morning. The company’s market cap is currently around $20.5 million.