Goodrich Petroleum Corporation (NYSE:GDP) announced that it has entered into a definitive agreement to sell its proved reserves and associated leasehold in the Eagle Ford Shale in LaSalle and Frio Counties, Texas for $118 million, subject to purchase price adjustments as provided for in the Purchase and Sale Agreement. The effective date of the transaction is July 1, 2015 with an expected closing date on or before September 4, 2015. The Company is retaining approximately fifty-eight percent (~ 17,000 net acres) of its undeveloped leasehold in the play for future development or sale. The asset being sold produced an average of approximately 2,850 barrels of oil equivalent (“Boe”) per day (~75% oil) during the first quarter of 2015.
The Company expects to book a gain of approximately $50-60 million on the sale at closing after factoring in customary closing adjustments. The Company plans to pay off its bank revolver and retain the difference in cash from the sales proceeds.
Regarding the sale, the Company’s President Robert Turnham stated, “The monetization of our proved reserves and associated acreage from our drilling efforts to date greatly improves our liquidity while maintaining a position in the Eagle Ford for future development or sale. Acreage retention was an important aspect of this transaction for us as it allows for additional future value creation from the asset in what we believe will be an improved oil price environment. The ability to pay off our bank debt and book the difference in cash in this difficult commodity cycle is an obvious benefit of the transaction as well. We continue to drive our well costs lower yet will remain conservative with our activity level, as we reiterate our full year capital expenditure budget of approximately $100 million, with sharply reduced capital expenditures in the last three quarters of the year.” (Original Source)
Shares of Goodrich Petroleum Corporation closed last Friday at $0.94. GDP has a 1-year high of $22.61 and a 1-year low of $0.92. The stock’s 50-day moving average is $1.73 and its 200-day moving average is $2.97.
On the ratings front, Goodrich Petroleum has been the subject of a number of recent research reports. In a report issued on June 18, Suntrust Robinson Humphrey analyst Neal Dingmann maintained a Buy rating on GDP, with a price target of $4, which represents a potential upside of 325.5% from where the stock is currently trading. Separately, on May 7, Imperial’s Kim Pacanovsky reiterated a Buy rating on the stock and has a price target of $7.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Neal Dingmann and Kim Pacanovsky have a total average return of -9.8% and -44.0% respectively. Dingmann has a success rate of 36.0% and is ranked #3635 out of 3712 analysts, while Pacanovsky has a success rate of 6.9% and is ranked #3711.
Goodrich Petroleum Corp is an independent oil & natural gas company engaged in the exploration, development & production of oil & natural gas on properties in South Texas, Northwest Louisiana & East Texas & Southwest Mississippi & Southeast Louisiana.