Energy Hunter Resources Inc., an oil-focused energy company headquartered in Dallas, Texas, has completed a private placement of 3,150,000 shares of its common stock and used proceeds to acquire acreage blocks in the Eagle Ford shale.
The private placement offering initially consisted of 2,500,000 shares, issued at a subscription price of $1.00 per share, for gross proceeds of $2.5 million. The company’s chairman and CEO, Gary Evans, invested 10% in the offering. Ultimately the offering resulted in an oversubscription of the private placement by approximately 25% for total proceeds of $3.15 million.
A portion of the proceeds from the private placement were used to acquire two lease acreage blocks totaling approximately 500 net acres located in the Eagle Ford shale of Karnes County, Texas along the Karnes Condensate Trend. The total acreage position is prospective for both the lower and upper Eagle Ford Shale, as well as the Austin Chalk formation. There are no drilling commitments on the acreage until 2017.
Energy Hunter owns 87.5% of the working interest in these properties and will be the operator of record on all new wells drilled. Approximately 14 wells can be drilled in the lower Eagle Ford formation between the two prospects, as well as an additional 10 wells in the upper Eagle Ford formation for a total of 24 wells, excluding the Austin Chalk formation and potential drilling sites therein. Combined, total recoverable reserves are estimated at 16 MMboe. At current strip pricing, adjacent wells have reached payout in less than one year with ROI's greater than 80% utilizing current commodity prices.
"Asset prices in the industry, even with the recent uptick in commodity prices, remain at severely depressed levels,” said Evans. “Many operators that may be over-leveraged or that may be seeking to unload non-core assets, are creating opportunities for companies like Energy Hunter Resources. Additionally, existing leases are expiring from their primary term due to the lack of capital being deployed.”
Going forward, the company plans to undertake an initial public offering and is currently negotiating to acquire undisclosed acreage blocks in the Permian Basin and mineral rights in the Marcellus and Utica Shale.