Alpha Energy Signs Option Agreement to Acquire Oklahoma Assets
U.S. independent Alpha Energy Inc. has executed an option agreement with Progressive Well Service LLC to acquire certain oil and natural gas assets located in the Coral Project in Oklahoma.
Under the terms of the agreement, Alpha has until December 31st, 2020 to exercise the option to acquire the Coral Project assets. During this period, Progressive cannot sell the Coral Project to any third party. In exchange, Alpha will issue 10,000 shares of its common stock, with such shares bearing a legend restricting sale during the option period. At any time during the option period, Alpha may exercise its option for a cash payment of US$50,000.
Upon exercising the option, Alpha and Progressive will enter into a Purchase and Sale Agreement (PSA) modeled after a PSA the parties had in place in early 2019, which lapsed due to no fault of either party. Under the new PSA, Alpha will make a cash payment of US$600,000 to Progressive and guarantee a further payment of 3% of the net revenue stream from any new wells drilled in the project until Progressive has received an additional US$350,000.
The Coral Project covers approximately 1,100 acres of developed and undeveloped proven properties in several prolific formations in the Cherokee Uplift, with the Mississippi formation being the current producing formation in the 28 wells that make up the project. An engineering reserve report commissioned by Alpha has identified 10 probable locations with approximately 2.27 million barrels of oil equivalent (MMboe) in net reserves as of year-end 2019, of which approximately 51% is gas.
The reserve report has also identified four behind pipe targets for immediate exploitation in the Coral Project, with numerous infill drilling opportunities in the Mississippian play. The greatest potential in the project may be in the Woodford formation, a prolific producer in the nearby STACK play area.
“The Cherokee Uplift offers many attractive opportunities to choose from for a company such as ours with little to no debt. The Coral Project fits these criteria nicely, allowing us a quick route to cash flow from existing production and infrastructure that can produce economically even at low commodity prices. Additionally, the Coral Project offers significant upside for us to pursue with new drilling as and when commodity prices improve,” said John Lepin, Alpha’s Chairman and CFO.
Houston-based Alpha is a development-stage E&P company engaged in the acquisition of existing reserves and oil & gas properties on the Cherokee Platform in Oklahoma, and in the Granite Wash play in Texas and New Mexico.