On June 14, 2013, GeoMet Inc. closed the previously announced sale of all of its coal bed methane (CBM) properties located in the state of Alabama. The sale resulted in net proceeds of approximately $62 million after normal and customary purchase price adjustments of $1.2 million to account for net cash flows from the effective date to the closing date.
Simultaneously with the close of the property sale, approximately $57 million was used to repay outstanding borrowings under the company’s credit agreement and $5 million was held in reserve to pay transaction related costs and expenses, including the liquidation of certain natural gas hedge positions. After this repayment, borrowings outstanding under the credit agreement totaled $77 million and such amount has been established as the new borrowing base.
In connection with this repayment the non-conforming “Tranche B” portion of total outstanding borrowings, which has existed since August 2012, has been eliminated and the company no longer has a borrowing base deficiency under the credit agreement. The next scheduled borrowing base determination is expected to occur on or around December 15th and will be based on the company’s reserves at June 30th. The credit agreement continues to have a termination date of April 1, 2014.
Lantana Oil & Gas Partners, a Houston based divestiture firm, represented GeoMet in this transaction.
GeoMet Inc. is primarily engaged in the exploration for and development and production of natural gas from coal seams (coalbed methane). Its principal operations and producing properties are located in the Central Appalachian Basin in Virginia and West Virginia. The comany also controls additional coalbed methane and oil and gas development rights, principally in Virginia, and West Virginia.