Enterra Energy (NASDAQ:EENC)
Historical Stock Chart
From Jun 2019 to Jun 2024
![Click Here for more Enterra Energy Charts. Click Here for more Enterra Energy Charts.](/p.php?pid=staticchart&s=N%5EEENC&p=8&t=15)
U.S. Energy Corp./Crested Corp. and Enterra Close Rocky Mountain
Gas Sale to Enterra
USECC Receives $18.8 Million in Stock and Cash and $3.3 Million Debt of Rocky
Mountain Gas is Refinanced by Enterra
RIVERTON, Wyo., June 2 /PRNewswire-FirstCall/ -- U.S. Energy Corp.
(NASDAQ:USEG) and its majority-owned subsidiary, Crested Corp., (OTC:CBAG)
(BULLETIN BOARD: CBAG) d/b/a USECC announced today that they have closed the
agreement to sell their natural gas subsidiary, Rocky Mountain Gas, Inc., (RMG)
(and RMG's subsidiary RMG I, LLC) to Enterra Energy Trust (Nasdaq: EENC; TSX:
ENT.UN) (Enterra) for $18.8 million in cash and stock. The agreement closed on
June 1, 2005. The $3.3 million in debt with Petrobridge Investment Management
of Houston, TX, which remained at RMG, has been refinanced and is no longer a
USECC obligation.
Enterra paid for the acquisition with $500,000 cash, $5,234,000 in freely
tradable trust units and $14 million in exchangeable shares which are
restricted for sale and will be exchanged for freely tradable trust units on
June 1, 2006. USECC received $18.8 million for its percentage of RMG.
USECC formed Rocky Mountain Gas, Inc. (RMG) in 1999 to take advantage of the
growing coal bed methane (CBM) play in the Powder River Basin of Wyoming and
Montana. Enterra has acquired all of the stock of RMG and will retain certain
employees and RMG's office in Gillette, Wyoming.
RMG's properties produced 728,051 mcf of CBM in 2004. RMG established
significant leaseholds in the Oyster Ridge area of southwestern Wyoming and in
the Powder River Basin of Wyoming and southeastern Montana. By mutual consent,
the sale agreement excludes RMG's equity interest in Pinnacle Gas Resources,
Inc., which has been assigned to USEG and CBAG. USEG owns 70% of CBAG.
Mark J. Larsen, former president of RMG, said, "We are pleased to have
concluded this transaction with Enterra, a highly respected oil and gas entity.
I firmly believe that the consideration we have received through our equity
ownership in Enterra will be of great value to the USEG and CBAG shareholders.
This transaction came at an opportune time. It has allowed us to improve our
liquidity, and at our discretion, to add value to our other significant natural
resource assets. It also allows us to remain in the gas, oil and CBM arenas
through an equity position in both Enterra and Pinnacle."
U.S. Energy President Keith G. Larsen added, "USEG management has stated that
we, as a company, are moving 'back to our future,' back to the mining and
milling of molybdenum, uranium and gold commodities upon which this company was
founded. Prices for uranium, vanadium and molybdenum are at their highest
levels in decades. Gold has also been trading at over $400 per ounce. USECC
has significant holdings in uranium and gold and expects to receive a 'world
class' molybdenum asset from Phelps Dodge in the near future," he added. The
consummation of the RMG transaction is expected to provide USEG with the
opportunity to complete and/or initiate the following:
1) Complete the retirement of $3.0 million of USEG debt ($500,000 paid on
June 1, 2005 and the $2,500,000 balance over 10 months).
2) Initiate exploration and development of uranium properties in Wyoming
and Utah. Primary among them are mines at Sheep Mountain, in south
central Wyoming, and more than 12,000 acres of uranium lode mining
claims in central and southeastern Utah. Many of the Utah claims show
evidence of extensive vanadium mineralization, as well as uranium.
3) Continue changing the status of the Shootaring Canyon Uranium Mill
from reclamation to operational.
4) Initiate the evaluation of the Mt. Emmons (Colorado) molybdenum
property that USECC anticipates receiving from Phelps Dodge
Corporation before year's end.
Uranium
Spot prices for uranium have increased more than three-fold since May 2002 and
now stand at $29 per pound of uranium concentrate on the spot market. USECC
will begin drilling this month to further delineate uranium resources at Sheep
Mountain. Additional drilling programs will also be conducted on other Wyoming
and Utah properties this year. In late 2004, USECC entered into a joint mining
agreement with Uranium Power Corp. (UPC) (TSX-V "UPC-V") for the development of
Sheep Mountain and other uranium properties in exchange for $4,050,000 cash and
4,000,000 shares of UPC-V stock. An installment payment of $500,000 to USECC
is due on June 27, 2005. UPC-V will also provide up to $10 million in
financing -- up to $500,000 each for up to 20 uranium ventures, including Sheep
Mountain. The joint mining and development agreement allows UPC-V to earn a
50% interest in each property.
In addition to its extensive resources in uranium, USECC owns the Shootaring
Canyon Uranium Mill in southeastern Utah, the last and most modern uranium mill
built in the U.S. The mill was mothballed in the 1980s, when the U.S. uranium
market collapsed. USECC has announced that it plans to spend up to $25
million, subject to financing, to refurbish the mill and install a vanadium
circuit over the next two years to bring it into production. The companies
project outputs of up to 1.5 million pounds of uranium and 4.2 million pounds
of vanadium per year from Shootaring once the mill is refurbished and placed
into production. Attaining this level of production will be dependent on
sustained high prices for uranium concentrates and vanadium, and overall the
grades of material fed to the mill being economic (containing sufficient
uranium and vanadium) at such sustained high prices, as well as other factors.
Molybdenum
Although USECC does not presently own molybdenum properties, it likely will
receive the Mt. Emmons (Colorado) property from Phelps Dodge by year's end.
USECC once owned mining claims, including the Keystone Mine, on and around Mt.
Emmons which it sold to AMAX Inc. in 1977.
After significant exploration efforts, AMAX estimated that Mt. Emmons contains
approximately 146 million tons of high grade (0.43%) molybdenum (approximately
900 million pounds.) Like uranium, moly oxide prices have surged in recent
years, reaching a 20-year high of $39.00 per pound as of June 1, 2005. Over a
period of more than 20 years, various owners of the Mt. Emmons property have
reportedly spent more than $200 million on acquisition, exploration and
planning for mining operations. Such components as environmental studies and
some mine operational plans must be upgraded and revised, but much of the
original work remains valid. Once the property is transferred, USECC will
evaluate all options available to the companies and endeavor to maximize the
value of this "world class" mineral asset.
Mark Larsen is slated to become the president of US Moly Corp., a wholly owned
subsidiary of USECC, in the near future.
Gold
Gold prices, too, have shown strong increases, rising by one third since early
2002 and standing at $415 per Troy ounce at June 1, 2005. In 2004, USECC's
majority-owned subsidiary, Sutter Gold Mining Company, merged with Globemin
Resources Inc. to form Sutter Gold Mining, Inc. (SGMI.) The newly formed
company is now developing mining claims located 47 miles southeast of
Sacramento, in California's historic 121-mile-long Mother Lode gold belt. SGMI
is in the final phases of environmental permitting and mine planning for an
operation designed to process up to 1,000 tons of gold-bearing material per
day.
"The sale of RMG strengthens USECC's financial position significantly," said
Keith G. Larsen. "We firmly believe that the value of our other significant
natural resource holdings will be enhanced as a result of this transaction,"
Larsen concluded.
ABOUT U.S. ENERGY CORP. AND CRESTED CORP.
U.S. Energy Corp. and its majority owned subsidiary, Crested Corp. are engaged
in a joint venture to conduct various business operations as USECC. Through
their subsidiaries, Sutter Gold Mining Inc., Plateau Resources Limited., U.S.
Moly Corp and USECC, they own interests or properties prospective for gold,
uranium, vanadium and molybdenum.
This news release includes statements which may constitute "forward-looking"
statements, usually containing the words "believe," "estimate," "project,"
"expect," or similar expressions. These statements are made pursuant to the
safe harbor provision of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements inherently involve risks and uncertainties that
could cause actual results to differ materially from the forward-looking
statements. Factors that would cause or contribute to such differences include,
but are not limited to, future trends in mineral prices, the availability of
capital, competitive factors, and other risks.
The profitable mining and processing of uranium and vanadium will depend on
many factors: Obtaining properties in proximity to the Shootaring mill to keep
transportation costs economic; delineation through extensive drilling and
sampling of sufficient volumes of mineralized material, with sufficient grades,
to make mining and processing economic over time; continued sustained high
prices for uranium oxide and vanadium; obtaining the capital required to
upgrade the Shootaring mill and add a vanadium circuit; and obtaining and
continued compliance with operating permits.
The profitable mining and processing of gold will depend on many factors,
including receipt of final permits and keeping in compliance with permit
conditions; delineation through extensive drilling and sampling of sufficient
volumes of mineralized material, with sufficient grades, to make mining and
processing economic over time; continued sustained high prices for gold; and
obtaining the capital required to initiate and sustain mining operations and
build and operate a gold processing mill.
We have not yet obtained feasibility studies on any of our mineral properties.
These studies would establish the economic viability, or not, of the different
properties based on extensive drilling and sampling, the design and costs to
build and operate gold and uranium/vanadium mills, the cost of capital, and
other factors. Feasibility studies can take many months to complete. We have
not established any reserves (economic deposits of mineralized materials) on
any of our uranium/vanadium or gold properties, and future studies may indicate
that some or all of the properties will not be economic to put into production.
The molybdenum property has had extensive work conducted by prior owners, but
this data will have to be updated to determine the viability of starting mining
operations. Obtaining mining and other permits to begin mining the molybdenum
property may be very difficult, and, like any mining operation, capital
requirements for a molybdenum mining operation will be substantial.
By making these forward-looking statements, the Companies undertake no
obligation to update these statements for revision or changes after the date of
this release.
DATASOURCE: U.S. Energy Corp.
CONTACT: Keith G. Larsen, President, or Don Warfield, Director of
Corporate Relations, of U.S. Energy, +1-307-856-9271