Resaca Exploitation Inc Planned Asset Dispositions (1075O)

TIDMRSOX

RNS Number : 1075O

Resaca Exploitation Inc

08 October 2012

 
 For immediate release   8 octoBER 2012 
 

Resaca Exploitation, Inc.

("Resaca" or "the Company")

Planned Asset Dispositions

Resaca (AIM:RSOX), the oil and natural gas production, exploitation, and development company focused on the Permian Basin in the USA, announces an update on certain corporate matters.

After considerable effort over the past year to pursue alternative opportunities for Resaca and its shareholders, Resaca's Board of Directors has determined the best course of action for the Company's is the sale of its Cooper Jal Unit and Langlie Jal Unit located within the prolific Southeastern New Mexico portion of the Permian Basin. The Company has engaged Albrecht & Associates, Inc. to market the sale of these properties. Sales proceeds from a disposition of Cooper Jal and Langlie Jal would be used to reduce indebtedness, bring the Company's credit facilities into compliance, and provide liquidity for capital expenditures on the Company's remaining properties or potential acquisitions. As the profits attributable to the assets being marketed represent over 75% of Resaca's total profits, any transaction to sell the properties would require shareholder approval in accordance with the AIM Rules. The sale of these properties would require shareholder approval. The marketing process for our two properties will begin mid-October 2012 with anticipated final bids to be submitted on or about the 21st of November. The Company anticipates a closing on the sale of these properties by 31 December 2012.

Resaca's Management believes Cooper Jal and Langlie Jal are truly exceptional properties. A large measure of the Company's cash-flow and borrowings under its credit facilities have been deployed at the Cooper Jal Unit to modernize the field, improve water injection, in addition to behind pipe recompletions and the drilling of new wells. The results have been encouraging relating not only to daily production but more specifically in the increase in reservoir pressure needed for both secondary and tertiary CO(2) recovery. The Company's third party reserve consultants have estimated a combined 500 million barrels of original oil in place for the Cooper Jal and Langlie Jal Units. The Company recently received the preliminary results of on an extensive study on the three formations within the Cooper Jal Unit performed by Netherland, Sewell and Associates. The results of this study affirmed that the Company's original oil in place figures for Cooper Jal were within the range of most likely estimates. This additional scrutiny further validates Management's position on the potential for additional recoverable oil at Cooper Jal and, by analogy, the potential for recoverable oil at Langlie Jal, which should provide additional credibility during the sales process.

At the Company's Langlie Jal Unit, which was acquired in August 2011, gross production has increased approximately 40% to 138 barrel of oil equivalents per day primarily through returning idle wells to production and the optimization of water injection. While Langlie Jal is at an earlier stage in its waterflood development process, Management continues to believe this property is analogous to the Cooper Jal Unit, thus further validating our thesis on the potential value of the Langlie Jal Unit.

Management will work diligently to keep Resaca's shareholders informed of its progress during the sales process and welcomes any questions or comments in the interim. Furthermore, Management anticipates meeting with shareholders upon signing of definitive agreements related to the property sales to discuss the future plans for Resaca, which include a variety of opportunities in the resource plays in the Permian Basin as well as global opportunities that have presented to the Company, as well as introduce the newest member to the Resaca team, Mr. E. Will Gray II, Executive Vice President and Head of Capital Markets and Business Development. Mr. Gray has been tasked to assist Management in the creation and execution of strategies to build future shareholder value in addition to providing oversight to our asset divestiture process.

Houston based Albrecht & Associates, Inc. has provided oil and gas asset and corporate divestment services to the energy industry for 25 years and has a significant amount of experience marketing properties with profiles similar to Cooper Jal and Langlie Jal.

J.P. Bryan, Resaca Chairman and CEO commented

"We have made considerable efforts to pursue alternative opportunities for Resaca and its shareholders and have concluded that a sale of the Company's Cooper Jal and Langlie Jal Units is the best course of action this time. While we believe these properties posses a substantial amount of upside potential that has yet to be realized, we believe this is the best strategy currently available to the Company to reduce corporate debt while continuing to pursue strategies to increase shareholder value. Resaca's Management has worked with Albrecht & Associates for 25 years and we are confident they run an excellent sales effort."

For further information please contact:

 
 Resaca Exploitation, Inc. 
 J.P. Bryan, Chairman and Chief Executive 
  Officer                                             [phone] 
 John J. ("Jay") Lendrum, III, Vice Chairman          [phone] 
 Dennis Hammond, President and Chief 
  Operating Officer                                   [phone] 
 Chris Work, Chief Financial Officer                  [phone] 
 
 Buchanan (Investor Relations)                    [phone] 
 Tim Thompson 
  Helen Chan 
  Ben Romney 
 
 finnCap Limited (Nomad and Broker)             + 44 (0) 20 7220 0500 
 Matt Goode, Corporate Finance 
  Christopher Raggett, Corporate Finance 
  Victoria Bates, Corporate Broking 
 

About Resaca

Resaca is an independent oil and gas development and production company based in Houston, Texas. Resaca is focused on the acquisition and exploitation of long-life oil and gas properties, utilizing a variety of primary, secondary and tertiary recovery techniques. Resaca's current properties are located in the Permian Basin of West Texas and Southeast New Mexico. Additional information is available at www.resacaexploitation.com.

In accordance with the AIM Rules, the information in this announcement has been reviewed and approved by Dennis Hammond, President. Mr. Hammond has a Bachelor of Science degree in Petroleum Engineering, is a registered professional engineer in the State of Texas, and has over 30 years relevant experience within the sector.

This information is provided by RNS

The company news service from the London Stock Exchange

END

MSCBKODDDBDDKKK