Denver-based Lilis Energy Inc. closed its merger with San Antonio-based Brushy Resources Inc., the company said June 24. The company also filed for relisting on the NASDAQ stock exchange.
In connection with the merger, Lilis completed a substantial recapitalization by which it completed a private placement of preferred stock for gross proceeds of $20 million, converted its outstanding shares of Series A preferred stock, outstanding debentures and some outstanding convertible notes, and also executed a reverse stock split.
Lilis said that these transactions strengthened the balance sheet and focused the company on its Delaware Basin acreage. There, the company has 3,458 core net acres with more than 500 multistack potential drilling locations including 320 in the Wolfcamp Formation.
The acquired assets include 7,217 gross (3,458 net) acres in the core Delaware Basin in Winkler and Loving counties, Texas, and Lea County, N. M. 93% of acreage is HBP through the base of all prospective formations. The acreage currently produces about 470 barrels of oil equivalent per day (boe/d), 47% oil.
There are 18 gross (12.8 net) producing operated wells. Recently, two gross (1.6 net) horizontals were drilled in the Wolfcamp A and Brushy Canyon formations via reentry through existing vertical wellbores.
There is additional near-term upside with 12 vertical wellbores awaiting horizontal development, initially targeting the Wolfcamp, Bone Springs and Avalon formations, Lilis said.
The potential locations’ EUR is more than 130 MMboe, based on internal estimates.
Lilis’s significant legacy assets include 23,031 gross (13,913 net) acres in the Denver-Julesburg (DJ) Basin in Weld County, Colo., Laramie County, Wyo., and Kimball County, Neb.
As part of the merger, Brushy’s CEO Michael Pawelek and COO Edward Shaw are joining Lilis Energy’s team in senior management roles; and Pawelek and Peter Benz were appointed to Lilis’ board of directors.
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