LONDON: Mosman Oil and Gas Limited has signed a binding contract for the sale of the Welch Project, in Texas, for US$420,000 in cash, with Steadfast Energy Partners, LLC (50%) and Silver Dollar Energy Investments, LLC (50%), and the closing is scheduled for 15 January 2021.
Whilst the Welch oil field is producing, the ranking of projects in the Strategic Review prioritised assets with lower operating costs including the projects in East Texas. The sale will result in a surplus over current carrying value of US$84,000 (cA$110,000) and the capital realised from the sale will facilitate investment in these target growth areas.
The Welch Project contributed a gross profit of A$228,000 in the year to 30 June 2020 and the carrying value of the Welch Project as at 30 June 2020 was A$500,000.
John W Barr, Chairman of Mosman commented: “The intention to sell Welch was first announced in February 2020, and a sale contract was signed in March, however despite time extensions, the counter-party did not complete that sale contract. We are pleased to have secured a new sale agreement at a 40% premium.
“Welch was a valuable stepping-stone for Mosman in terms of experience and building a production base in the US while we built a position in East Texas. The sale of Welch will enable management to focus on further development of the projects where we see strong near-term development potential.” www.mosmanoilandgas.com