Another casualty of the downturn in oil prices: Australia’s New Standard Energy Ltd. is exiting the U.S.

New Standard said June 29 it reached an agreement with Sundance Energy Australia Ltd. to sell assets in the U.S. and South Australia’s Cooper Basin for A$24 million (US$18.4 million).

The U.S. assets include two projects in Texas, one in Colorado County in the Gulf region and the other in Atascosa County in the Eagle Ford Shale.

New Standard holds a 32.5% working interest in the Colorado County Project, which is operated by AKG Energy.

In Atascosa County, the company has about 5,500 net acres and seven producing wells in the Eagle Ford. Two wells have been drilled but not completed. Current net production is about 175 barrels of oil equivalent per day. Magnum Hunter Resources Corp. (MHR), the company’s majority shareholder, has overseen the drilling and operating program in the play.

However, the company has been struggling to fund its operations in the U.S. due to the collapse in global oil prices, said Arthur Dixon, chairman of New Standard, in the release.

In April, in order to provide itself with enough working capital, the company secured an additional US$3 million from its existing debt facility with Credit Suisse.

“Any additional work would require access to additional debt or equity funding to drill and fracture-stimulate more wells to retain our acreage and grow our reserves base, which is prohibitive in light of our current debt facility, lender appetite and broader equity market for small oil and gas explorers and developers,” Dixon said.

Credit Suisse has agreed to continue funding the company—to the extent required—until the transaction is completed, according to the release.

New Standard expects the deal to eliminate all of its debt and provide sufficient liquidity to develop its onshore assets in Western Australia.

New Standard entered into a strategic business partnership with Magnum Hunter after buying its Eagle Ford assets in Atascosa County in January 2014. Through the partnership, Magnum Hunter shared its technical knowledge and expertise in the shale and tight gas industry with New Standard for its operations in the Eagle Ford Shale, Cooper Basin and Canning and Carnarvon basins in Western Australia.

New Standard said it plans to continue its ongoing discussions with other parties to seek funding and a suitable partner for its three onshore projects in the Canning and Carnarvon basins. The company remains a 100% shareholder in all three projects, providing it with a significant footprint in two prospective onshore basins and substantial equity to underpin additional corporate activity.

Sundance also agreed to buy New Standard’s shares in Elixir Petroleum Ltd. in conjunction with the transaction.

Following the completion of the transaction, Sundance will have about 37,000 net acres in the Eagle Ford. Though upon closing, Sundance said it plans to sell 25% of the assets acquired from New Standard, and roughly 400 net acres (25%) of Sundance’s Charlotte Ranch lease in Atascosa County, Texas, to Quintanilla Management Co.

 

Source: Oil and Gas Investor