Independent oil and gas company Resolute Energy Corp (NYSE:REN) traded higher by 19.55%, closing at $30.70 after trading 5.28 million shares.
On Tuesday, Resolute announced its acquisition of 3,293 net acres of oil and gas properties in the highly productive Delaware Basin operating area.
Resolute’s shares have been on a sustained uptrend since early July, boosted by a string of analyst upgrades of which two were announced yesterday.
Resolute Energy Corp (NYSE:REN) to pay $135 million to Firewheel Energy
The company said Wednesday that it would pay $135 million, comprising $90 million payable in cash and $45 million through the issue of 2,114,523 shares of common stock, to Firewheel Energy for the acquisition. The oil and gas properties being acquired contain estimated proved reserves of 6.2 MMBoe with PV-10 of $45.8 million, and include interests in 13 horizontal and 15 vertical wells, which produce about 1200 net Boe per day.
An added advantage of the acquisition is that about 95% of the acreage and substantially all of the production and proven reserves are located within Resolute operated territories.
“This transaction allows us to add acreage, production and opportunity without either the uncertainty associated with acquiring more speculative acreage or adding to our staffing and infrastructure needs,” said Nicholas J. Sutton, Resolute’s Chairman and Chief Executive Officer. “We believe that the Firewheel acquisition is exactly the kind of targeted, focused, consolidating opportunity that leverages the strengths of our team and our assets.”
Resolute Energy Corp (NYSE:REN) to fund cash component with issue of preferred stock and revolving credit
The company simultaneously announced a private offering of 55,000 shares of 8-1/8% convertible preferred stock priced at $1000 per share, and may raise a maximum of $60 million from the issue. The proceeds will pay partially for the aforesaid acquisition of oil and gas acreage from Firewheel Energy.
The stock also benefited from initiations of coverage by analysts Seaport Global and Rodman and Renshaw, both handing a Buy rating. Seaport has a price target of $45 and Rodman a target of $32.