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Black Mountain Energy Sell Half Moon Prospect for $10.7M

24 August 2023 12:44
ASX: BME
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Black Mountain Energy‘s (ASX:BME) wholly owned subsidiary Seven Rivers Operating LLC has entered into a binding sale and purchase agreement with Tap Rock Resources III, with LLC selling 100% of its acreage, title and interests in the Half Moon Prospect (MIA 64 FEE 2H), located in the Permian Basin.

The transaction totals $6,873,308 USD equivalent or approximately $10.7 million Australian dollars before tax.

The Half Moon Prospect

Back in January of this year, the Company revealed its acquisition of the Half Moon Prospect, positioned in the northwestern section of the Delaware Basin.

The purchase was valued at $2 million USD, with Black Mountain Energy aiming for a consistent monthly production revenue to support its other ventures, including the flagship Valhalla natural gas project in the Canning Basin.

Highlighting proven petroleum systems, the Half Moon Prospect boasts eight acquisition wells that have collectively yielded almost 3 million barrels of oil equivalent (mmboe) from the leased acreage.

Upon acquisition, the inclusion of the Half Moon Prospect in its portfolio introduced diversification to Black Mountain Energy’s business model, incorporating non-operated production derived from 8 PDP late-life vertical wells spanning more than 3,200 gross non-operated acres.

Within a span of less than eight months, Black Mountain Energy engaged in the drilling of its initial appraisal well within the 3rd Bone Spring interval. This drilling endeavour, with an estimated cost of $1.4 million USD, has culminated in the current announcement of a robust cash offer.

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Figure 1: Location of Half Moon Prospect

Terms of Sale

The buyer will undergo the customary 30-day due diligence phase, during which the sale price will be revised to account for any net changes in acreage and revenue that transpire within this window.

Additionally, Seven Rivers Operating LLC has consented to a 10% break free should the agreement terms be violated.

This transaction promptly supplies Black Mountain Energy with the essential funds required to concentrate on the development of its primary asset, Project Valhalla.

The Future is Valhalla

The proceeds from the sale of the Half Moon Prospect will be allocated by Black Mountain Energy to shift its focus towards its projects in Western Australia.

One of these projects is the Valhalla Project(EP371), situated in the Fitzroy Trough within the Canning Basin, encompassing a permit area of 3,662 square kilometres.

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Figure 2: The Valhalla Project in the Canning Basin WA

With the Canning Basin standing as the eighth largest untapped gas reservoir globally and the final undeveloped basin within Australia, abundant exploration prospects await Black Mountain Energy.

In 2022, Black Mountain Energy affirmed the compatibility of Valhalla’s gas for blending, converting into sought-after LNG, with this achievement empowering the Company to advance resource development, maximising the potential of export opportunities.

Reflecting on the transaction’s success, Rhett Bennett, Executive Chairman of Black Mountain Energy, shared his insights, “A return on investment of 100% in less than 8 months is both a tremendously quick and strong outcome for the Company,” he said.

“Funds will be used to progress the Company’s flagship project in the Canning Basin, which has the potential to be an incredibly large resource. Progressing Project Valhalla as swiftly as possible is our focus.”

BME’s Australian Stock Exchange-listed share price has risen 28.571% and is currently trading at $0.027 (12.30pm UTC+ 8 hours).

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