Resolute Energy Corp. (NYSE: REN) is set to receive close to $110 million in another assets sale deal. The company has announced an agreement with an unnamed buyer to sell some of its Permian Basin midstream assets. The company is particularly selling its interest in Appaloosa and Mustang projects in Reeves County, Texas.
The sale of the assets will generate $50 million upfront with the balance of $60 million being tied to performing of drilling activities that will run through 2020. The assets being sold relate to gas gathering and water handling systems. A minority portion of the interest in the assets being sold is owned by Resolute Energy Corp. (NYSE:REN)’s unnamed partner.
$50 million upfront and the balance later
The total consideration for the sale of interests in Appaloosa and Mustang projects is valued at $110 million. But the buyer will initially release $50 million with the balance being spread out over some years.
Of the $50 million upfront payment for the assets sale, Resolute Energy Corp. (NYSE: REN) will receive $32.85 million while its partner who holds a minority claim in the assets will receive the balance of $17.15 million.
About the remaining $60 million
Resolute Energy Corp. (NYSE: REN) said that the remaining $60 million will be settled on earn-out payments basis. As such, the payment is tied to the field drilling activity that will run through 2020. The company also provided details about how the balance will be shared with its partner. It said that it will receive 100% of the earn-out payments relating to the Appaloosa area. But for the Mustang area, it will receive 60% and the partner will receive 40%.
Resolute Energy said it is also in to receive $2.3 million in a separate payment that relates to the wells completed as part of a 2016 drilling program that it already had in place.
Resolute Energy Corp. (NYSE: REN) putting the money to use
Resolute Energy Corp. (NYSE: REN) hopes to use the initial proceeds from the sale of interests in the Appaloosa and Mustang projects to pay down its debt and fund its activities in the Delaware Basin, west Texas. The company expects the sale of the Appaloosa and Mustang assets to complete on August 1 or thereabout.