Denver 1800 hours September 23rd, 2010, Perth 0800 hours, September 24th, 2010 Samson Oil & Gas Limited (ASX: SSN, NYSE AMEX: SSN) advises that it has closed an additional portion of its previously announced Goshen County transaction, confirming that an additional US$6.3 million was received this week in consideration for delivery of drilling permits for three State leases. Samson presently expects to close the final portion of the sales transaction during the week of September 27th. Samson anticipates receiving net consideration of at least US$ 2.2 million at that closing and considers it likely that it will receive another US$ 1.9 million as a result of curing various title defects. Thus, the total transaction to date can be summarized as follows: Cash received to date US$ 70.0 million Most likely cash to be received the week of September 27th US$ 4.1 million Most likely total consideration US$ 74.1 million Under the sale and purchase contract that Samson entered into on June 24th with the buyer, Chesapeake Energy Corporation, Chesapeake acquired 100% of Samsons working interest in the subject leases but Samson has retained a royalty averaging 3.8% across those leases. While Samson therefore holds an indirect financial interest in the future development of the leases, Samson has no control over the pace or scope of that development. The royalty rate has changed from that previously announced because during the course of this transaction several top leases, and lease extensions have been purchased or entered into and the underlying royalty rates have modified the Samson retained royalty. Samson has also retained 17,000 net acres immediately to the north of the leases that have been sold and intends to pursue the appraisal and development of that area. To this end it has engaged a seismic acquisition company to acquire a 65.5 square mile 3-D seismic survey, which will image this acreage block. Permitting for this seismic survey has commenced and it is expected that the acquisition will commence mid-late October. The survey has several objectives. Firstly, it will help Samson to identify the brittle portions of the Niobrara Formation that are more conducive to natural fracturing as well as the location and orientation of the natural fractures. Secondly, the 3-D seismic data will help image two conventional targets, the J Sand and the Codell Formation which have proven to be productive in the area. The 3-D seismic data is expected to be available for interpretation in the first quarter of 2011 and the plan is to drill two initial appraisal wells utilizing horizontal multi-stage fracture stimulation methods proven successful in the Bakken Formation in North Dakota. If these wells perform adequately then the project would move to a full field development.
SSN Price at posting:
7.0¢ Sentiment: Buy Disclosure: Held
