Land Sale for USD 2.8 million / Further royalty revenues expected
Heidelberg/Denver. Elster Oil and Gas LLC (EOG), formerly Tekton Energy LLC and currently a 93% owned subsidiary of Deutsche Rohstoff, has sold a remaining piece of land near the town of Windsor, Colorado. The land was originally acquired to build a central oil assembly facility in the area. The sale price was USD 2.8 Mio. for the land and the related water rights. The purchase price in early 2013 was USD 2.5 million. The land is not related to the Magpie acreage owned by EOG.
Not sold were the mineral rights of the land, which were also bought by the company as part of the land acquisition. The rights grant the owner a royalty for the respective acreage associated with oil and gas production. The owner of the mineral rights does not have to participate in any investment capital or subject itself to any operating hazards and therefore has no risk.
According to information received by EOG management, an offset operator of the neighbouring acreage currently plans to begin drilling horizontal wells in the first quarter of 2015. These activities will develop EOG’s mineral rights and therefore entitle EOG to receive royalty revenues. Codell wells are initially planned for drilling development which have been very prolific recently in the Windsor area as a result of drilling activity. Based on local production results for the Codell, management evaluates these mineral rights to have a net present value of at least USD 5 million.
Heidelberg, 24 September 2014