March 2, 2024

Dallas-based Principal Solar Inc. and its joint venture partner Executive Logistics & Transportation (ELT) have completed the acquisition of several leases for oil and gas wells and field equipment located in the Minerva-Rockdale oil field in Milam County, Texas from Winchester Oil & Gas LLC, Principal Solar said in a news release. It did not disclose the price.

Principal Solar and ELT obtained both operating and non-operated interests in the Minerva-Rockdale oil and gas leases, which cover approximately 11,000 acres in Milam County. The leases include 936 total production and disposal wells. The assets associated with the purchase include 657 pump jacks, 48 tank batteries, and 2.3 miles of pipeline, Principal Solar said.

Principal Solar said it plans to fund the acquisition with a combination of restricted stock and the assumption of some debt. In the future, Principal Solar will have the option to increase its equity percentage in the field in exchange for the issuance of the company’s common stock, subject to market conditions and other factors.

“During our due diligence period, we noted that oil production has occasionally reached quantities as high as 380 barrels per day, which is significantly higher than our original 200-barrel estimate”,  Principal Solar Chairman and CEO K. Bryce Toussaint said. “Assuming this higher production level continues, our joint efforts in the field with ELT could potentially realize annual gross revenues as high as $9.5 million. Meanwhile, we are working to increase production to our minimum goal of 500 barrels per day.”

Of the 936 total wells included in the deal, 74 are currently producing from the shallow Navarro A & B formations. The other wells are shut-in—non-producing wells that will “require the development, funding, and implementation of a work-over program to return to production status”, the company said.

Principal Solar expects the drilling of the additional wells to be relatively inexpensive and involve relatively low risk.

“The Minerva-Rockdale working interest acquisition offers truly remarkable upside potential to Principal, its partners, and its stakeholders”, Principal Solar COO Anthony Lerner said. Lerner said, citing a recent engineer’s report, the assets have total proven reserves of approximately 4,102,680 barrels and are valued at around $116 million. Lerner said that the company plans to return 100 to 120 of the non-producing shut-in wells to full production status, and that they expect the wells to “double or triple production in the first nine to 12 months”.

“Principal continues to successfully execute its strategy of identifying and acquiring oil & gas properties with the potential to bring significant value to our stakeholders”, Toussaint added. “The completion of this acquisition brings immediate revenue potential to the company, and with Minerva’s proven reserves, significant upside potential.”

“We anticipate that Winchester’s leases, equipment, and operational expertise combined with our know-how, relationships, and deep capital markets experience stand to transform the storied Minerva-Rockdale Oil Field into a reliable source of increasingly profitable production and revenue”, Toussaint said in an earlier release.

According to the news release, the Minerva-Rockdale oil field was discovered in 1921 and was once one of the largest oilfields in Texas. Before 1950, the field produced four million barrels of oil, and total production from August 2014 to date was measured at 481,000 barrels. The oil field “remains a steady producer with significant reserves of oil yet to be recovered”, according to an engineer’s report cited in the release.

Principal Solar said it is an investor in and operator of “undervalued petroleum producing properties”, as well as in the renewable and clean energy sectors.

ELT is a shipping and logistics company with headquarters in Memphis, Tennessee.

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