USEG - U.S. Energy Corp. Announces Transformative Acquisition Targeting Helium Production | Benzinga
HOUSTON, July 01, 2024 (GLOBE NEWSWIRE) -- U.S. Energy Corporation (NASDAQ:USEG, "U.S. Energy" or the "Company")) today announced that the Company has closed a transaction (the "Agreement") with Wavetech Helium Inc ("Wavetech" or "WT") for the acquisition of operated acreage targeting helium production across the Kevin Dome structure in Toole County, Montana (the "WT Asset"). Additionally, the Company has executed a non-binding letter of intent (the "LOI") with Synergy Offshore, LLC ("Synergy" or "SOG") to acquire offsetting operated acreage (the "SOG Asset"), forming a largely contiguous acreage position across the Kevin Dome of approximately 164,000 net acres, as discussed in greater detail below (collectively the "Assets").
HIGHLIGHTS
- Closed Wavetech Agreement on June 26, 2024. The WT Asset includes:
- Approximately 140,000 net acres.
- Multiple prospective helium pay zones consisting primarily of inert nitrogen and carbon dioxide heavy zones.
- Executed Synergy LOI on June 25, 2024. The SOG Asset includes:
- Approximately 24,000 net acres, highly contiguous to Wavetech acreage.
- Multiple prospective helium pay zones, initially targeting carbon dioxide heavy zones.
- Planned and permitted two upcoming drilling locations on WT Asset.
- Wells expected to be spud in late July and early August 2024.
- Industry leading low environmental footprint through the production of non-hydrocarbon helium.
- Initiation of carbon sequestration business significantly expands opportunity.
- Company development plans are highly aligned with local, state, and federal legislation.
- Transactions are structured to minimize existing dilution while maintaining current attractive leverage profile.
- The Company does not anticipate raising outside capital to execute on this asset move, with cash on hand, cash flow, and anticipated proceeds from non-core asset sales expected to fund considerations and near-term development.
- Upcoming investor call to further discuss the transactions is scheduled for Wednesday, July 10, 2024 at 10:00 a.m. ET/9:00 a.m. CT, details below.
MANAGEMENT COMMENTARY
"With U.S. Energy's acquisition of the Wavetech assets covering a vast resource position across Montana's Kevin Dome structure, the Company believes that it has positioned itself to exploit what we anticipate will be a transformational resource and economic opportunity in an area with which we have a longstanding community footprint," said Ryan Smith, U.S. Energy's Chief Executive Officer, who continued, "Simply put, we believe the Kevin Dome structure holds tremendous overall resource potential and full-cycle helium economics competitive with any location in North America. We also believe in future acquisition opportunities across the structure that highly complement this acquisition, as evidenced by U.S. Energy's letter of intent to acquire an additional position which is highly contiguous to the acquired assets. Together, as U.S. Energy begins development, these positions are expected to drive valuable cost synergies, flexible planning capabilities, and continued balance sheet strength."
Mr. Smith continued, "While the most recent global helium shortage has eased in recent months, the world continues to struggle with supporting the growing helium needs of the aerospace, semi-conductor, and medical industries as well as the major risks to other global sources of helium. Issues ranging from global shipping disruptions to trade restrictions that impact foreign supply highlight the importance of reliable, clean helium that is domestically sourced. We expect to begin operations in the near term, with U.S. Energy currently scheduled to begin drilling two wells on the acquired acreage, with expected start dates in late July and early August 2024. Throughout this process, our geoscience and reservoir engineering has been focused on development optimization and resource management and we expect that this initial drilling will result in significant proved resource conversion with highly compelling economics.
"Across the vast asset base that U.S. Energy now controls, we expect to produce helium from multiple underground zones consisting primarily of both inert nitrogen and carbon dioxide. To that end, U.S. Energy is pleased to have initiated our new carbon sequestration business and have begun the planning and permitting phase where we intend to utilize U.S. Energy-owned infrastructure to sequester carbon. Greening the global helium production process while supporting recent state and federal legislation to do so is a win for all stakeholders, and we plan to pursue that strategy."
"In closing, we are delighted to work with our new partners moving forward, the state of Montana, and all of U.S. Energy's stakeholders, to work to effectuate this transformational transaction which we believe creates a unique and powerful platform that will drive value creation. We look forward to further updating the market in the coming weeks on our scheduled investor call," said Mr. Smith.
OVERVIEW OF ASSETS
The collective Assets comprise control of approximately 164,000 net acres across the ...