Zargon Oil & Gas Ltd. (TSX:ZAR)(TSX:ZAR.DB) has closed its previously announced $36 million sale of 275 barrels of oil per day pertaining to all of its southwest Manitoba assets and selected properties in the Elswick area of southeast Saskatchewan. The proceeds from the transactions have been used to reduce bank indebtedness.
With the closing of these property sales, Zargon has entered into renewed committed syndicated credit facilities with a borrowing base of $165 million. The credit facilities are fully revolving for an additional 364 day period with the provision for an annual extension at the option of the lenders and upon request from Zargon.
Zargon is well positioned to manage the current period of lower commodity prices. Subsequent to the two property sales, Zargon's net debt is approximately $95 million and is comprised of $57.5 million of five year convertible debentures (ZAR.DB) and approximately $37.5 million of bank debt and working capital deficiencies. With these transactions concluded, Zargon has access to over $120 million of unutilized credit facilities.
In addition, Zargon has entered into oil hedges totalling 2,500 barrels per day in the second half of 2012, 1,450 barrels per day in the first half of 2013 and 600 barrels per day in the second half of 2013 at respective West Texas Intermediate oil prices of $97.96, $101.95 and $103.30 US per barrel.