Acquisition includes approximately 130 oil and gas wells currently producing approximately 100 barrels of oil and 1.5 million cubic feet of natural gas By Day
Lenexa, KS, May 19, 2022 (GLOBE NEWSWIRE) — American Noble Gas Inc. (OTC-QB: IFNY) (“AMGAS” or the “Company”) is pleased to announce that it has acquired a 60.7143% equity interest in GMDOC, LLC, a limited liability company of Kansas (“GMDOC”), which previously acquired working interests in certain oil and gas leases (the “GMDOC Leases”) from Castelli Energy, LLC, an Oklahoma limited liability company (“Castelli”). The GMDOC leases cover approximately 10,000 acres located in southern Kansas near the Oklahoma border. The GMDOC leases currently produce approximately 100 barrels of oil per day and 1.5 million cubic feet of natural gas per day on a gross basis.
On May 3, 2022, AMGAS entered into the GMDOC operating agreement (the “Operating Agreement”), pursuant to which the Company acquired 17 (or 60.7143%) of the 28 limited liability interests (the “Participations”) in GMDOC, for an aggregate purchase price of $4,037,500, and was subsequently admitted as a member of GMDOC.
GMDOC had acquired a 70% working interest in the GMDOC leases from Castelli. GMDOC is managed by two other members – Darrah Oil Company, LLC, a Kansas limited liability company, and Grand Mesa Operating Company, a Kansas corporation (the “Management Members”) – each of which also serves as corporations operating under GMDOC leases. .
Pursuant to the terms of the operating agreement, each member has agreed to contribute to GMDOC, as a capital contribution, $50,000 in cash per interest, with the balance to be funded by a loan to GMDOC from a bank , secured by GMDOC’s oil and gas concession properties. , for a total amount of $6,045,000. The principal of the bank loan is to be repaid in 84 variable monthly installments beginning July 1, 2022, ranging from $170,000 at the start to $40,500 at the end of the loan term. The bank loan bears variable interest starting with an initial rate of 6% per annum with a rate adjustment after 36 months subject to a minimum interest rate of 6%. The initial working capital was financed, in part, by a loan to GMDOC from a managing member, for a maximum total amount of $400,000, which is to be repaid over 12 months and bears interest at the rate of 6% per year.
With respect to its cash capital contribution, the Company paid a non-refundable cash deposit for participations in the amount of $50,000 on May 3, 2022 and paid the balance of the cash contribution for participations , i.e. $800,000, on May 16, 2022 The remainder of the Company’s capital contribution, i.e. $3,187,500, was financed by the bank loan.
The Company funded the cash contribution by issuing 8% senior unsecured convertible promissory notes due June 29, 2022 to two institutional investors. The Company issued a total of 425,000 common shares to these two institutional investors in consideration for these notes.
Stanton E. Ross, President and CEO of AMGAS, said, “We are very pleased to be part of a team with Darrah Oil Company, LLC and Grand Mesa Operating Company, who are well-known leaders in the industry, particularly in Kansas and Oklahoma where these oil and gas leases are located. The underlying leases are currently generating positive cash flows and also contain significant opportunities for future development. I think it’s very telling that a commercial bank is willing to provide long-term debt financing for a substantial portion of GMDOC’s overall capital contribution. We are very pleased with our ownership position in such a prolific set of oil and gas leases and will continue to pursue similar opportunities,” added Mr. Ross. Mr. Ross concluded, “In addition to our commitment to the region and our long-term goal of developing noble gases, this partnership will produce immediate revenue and results for our shareholders.
Will Darrah, Third Generation Oil and Gas Producer and Director of Darrah Oil, said, “At Darrah Oil, we pride ourselves on advancing energy and believe that natural gas is a critical fuel for the future. . We are impressed with the team at American Noble Gas and are excited to work with them on this project which we believe provides good existing cash flow with potential for organic growth.
About American Noble Gas, Inc.:
In April 2022, AMGAS acquired participation rights in a certain farm-out agreement (the “Farm-out Agreement”) to explore and develop natural gas, helium and brine minerals within the field. Hugoton Gas Company in Haskell and Finney Counties, Kansas. AMGAS holds a 40% interest in the affermage agreement which covers the drilling and completion of up to 50 wells. The initial exploration well was sunk in May 2022 and is currently expected to be completed in June 2022. The initial exploration well has shown encouraging results for natural gas and helium reserves.
In April 2021, AMGAS acquired production and mining/leasehold rights for approximately 11,000 acres of oil and gas properties in the Otis/Albert field located on Kansas’ central uplift. Prior to this acquisition, AMGAS was involved in oil and gas exploration, development and production of natural gas and petroleum in Texas and the Rocky Mountain region of the United States and was an oil services company located in the United States. eastern Kansas, northern Oklahoma, Colorado and Wyoming prior to December 2012. AMGAS was founded in 1987, is headquartered in Lenexa, Kansas and its common stock trades on the OTC-QB under the symbol “IFNY”. The Company’s financial statements and additional information are available on the Internet at www.otcmarkets.com and on the SEC’s website at www.sec.gov.
This press release contains statements that may constitute “forward-looking” statements, generally containing the words “believe”, “estimate”, “project”, “expect” or similar expressions. These statements are made pursuant to the safe harbor provisions 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. Forward-looking statements in this press release include the following: whether the Company will be successful in exploring for noble gases, including the development of commercially efficient production of its noble gas reserves, the development of oil and gas reserves of GMDOC Leases; whether the Company will be successful in workover/stimulation activities of existing producing oil and gas wells that will result in increased production from the GMDOC Leases; whether the Company will be able to execute its exploration and development plans for the GMDOC Leases, including securing the required funding; if the financing required for the exploration and development of the GMDOC Leases may be obtained on terms favorable to the Company and its shareholders; the amount of hydrocarbons under the GMDOC Leases and whether they can be extracted economically; the accuracy of the consultants’ preliminary analysis and estimate of recoverable oil and gas reserves (including rare gas reserves) on the GMDOC Leases and their underlying assumptions; whether or to what extent the geological zone concerned contains hydrocarbons and/or rare gas; the inability to predict, prior to drilling and testing, whether a particular prospect will produce oil or gas in sufficient quantity to recover drilling and/or completion costs or to be economically viable; the fact that the process of estimating the quantity of oil and gas in a perspective is complex, requiring the interpretation of available technical data and many assumptions; the potential for material inaccuracies in such interpretations and assumptions that could materially affect the Company’s estimates or those of its consultants; the need to base estimates on available geological, geophysical and engineering data which may vary in quality and reliability; the inherent lack of precision in estimates regarding the amount of noble oil and gas in the Kansas development project due to the foregoing; whether the Company will be successful in exploring the existence of mineral reserves other than oil and gas in commercial quantities, including the development of the reserves underlying such reserves and its ability to find a qualified partner, if necessary, with whom to continue its exploration and development program on terms and conditions acceptable to the Company; the Company’s ability to extract oil and gas from the GMDOC Leases and the technical and other costs and challenges of extracting oil from the GMDOC Leases; changes in oil and gas prices, unexpected negative geological deviations, governmental uncertainties in Kansas; operating risks, delays and issues, availability of services on acceptable terms, results of drilling and completions; changes U.S. oil and gas regulations; actions of creditors with respect to debt or other financial obligations of the Company; and its ability to meet its liquidity and capital needs. Additional information regarding factors that could materially affect the company and its operations is contained in its Annual Report on Form 10-K for the year ended December 31, 2020.1 and its Form 10-Q for the three months ended March 31, 2022 as filed with the Securities and Exchange Commission.
For more information, please contact:
Stanton E. Ross, CEO, at 816-955-0532