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On 3 December 2018, Sacgasco Limited (ASX:SGC) announced that it has fully acquired the strategic portfolio of natural gas production and development assets in the prolific Rio Vista Gas Field in the Sacramento Basin, California. The Rio Vista Field is one of the 15 largest natural gas fields in the USA and it is the largest natural gas field in the Sacramento Basin. Following the release of this news, the share price of the company increased by 3.333 percent as on 3 December 2018.
The wells which are acquired by Sacgasco Limited are located within a 467-acre oil and gas lease, with production from depths between 5k and 7k feet. The property includes 2 very long-term producing wells which are having flows over 300 Mcf/day and each of these wells has produced around 4 Bcf of gas to date. At current gas prices, these flows yield gross revenue of around US$60k per month before costs with a favorable net revenue interest of more than 85 percent.
The company has also acquired property including an oil and gas lease, wells and associated production facilities for no cost, with the vendor agreeing to immediately pay approximately US$1 million cash to Sacgasco as a contribution to future abandonment costs for the acquired wells.Â
As per the companyâs announcement, a positive trend of increasing natural gas prices is providing additional cash flow to the company. The current benchmark gas price is over US$6.50 per mcf and at these prices, each Bcf of produced gas will deliver gross revenues of US$ 6.5mn. According to Sacgascoâs Managing Director Mr. Gary Jeffery, these natural gas production and development assets will strengthen the companyâs production and development portfolio in the Sacramento Basin. He also stated that this acquisition is in line with the companyâs strategy of acquiring under-developed assets in the Sacramento Basin which are having upside production and development.
Very Soon, the company is going to provide an update on the initiatives which the company has taken to enhance the current production from its 30-well portfolio in California with some new exciting work-over opportunities identified. Further, the company will also provide an update on its progress in evaluating the large Alvares appraisal prospect, including encouraging geological interpretation.
In the first half of FY 2018, the company incurred a loss of $1.802 million which was substantially less than the loss of the previous corresponding period ($5.04 million). The basic and diluted loss per share of the company was 0.73 cents in H12018. The net cash used in operating activities was 1.665 million in H1 2018.
In the last six months, the share price of the company decreased by 25.00 percent as on 29 November 2018. SGCâs shares traded at $0.031 with a market capitalization of $7.79 million as on 3 December 2018 (AEST 4:00 PM).
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