Jericho Signs a Letter of Intent Building on
Previous Chaparral Acquisition
VANCOUVER and TULSA, OK, Oct. 19,
2015 /CNW/ - Jericho Oil Corporation ("Jericho" or the
"Company") (TSX-V:JCO; OTCQX:JROOF), a growth-oriented oil and gas
company engaged in the acquisition, exploration, development and
production of overlooked and undervalued oil properties in the
Mid-Continent, announces that it has signed a Letter of Intent
("LOI") to acquire a 50% working interest in six horizontally
producing wells and drillable leaseholds in Central Oklahoma for a total cash
consideration of USD$1.55
million.
The acquisition totals just over 10,000 acres with current gross
production of approximately 119 barrels of oil equivalent per day
(87% Oil, 13% Gas at an economic equivalent 20mcf:1 BOE) including
four saltwater disposal wells. The asset package is in an
area complementary to Jericho Oil's existing operations in
Oklahoma and represents the
Company's third acquisition within Central and Northeast Oklahoma in 2015.
Jericho's primary business strategy during the low-price oil
environment is to roll-up undervalued high-quality producing oil
assets within the Mid-Con that are or can be operated below
$20 per barrel.
The planned acquisition is located east of the Nemaha Ridge, a
structural uplift which gives way to higher oil and liquids content
on the eastern flank within the Mississippi Lime formation.
The Mississippi Lime region, more broadly, has seen the steepest
year-over-year decline in rig count to-date, which serves as a
function of capital flight and has resulted in advantageous market
dislocations relative to other basins across North America.
Accordingly, many small to large cap producers have vacated the
region, allowing Jericho the opportunity to capitalize on the large
sunk costs, exploration efforts and experiences of previous
development. In an environment of generally low prices, favorable
operating economics and unfavorable drilling economics are mutually
exclusive. While the Mississippi Lime region has struggled to
maintain its place as the "next horizontally drilled shale play,"
the operating economics on producing horizontal wells remain
extremely compelling.
The planned acquisition was previously drilled
horizontally. However, Jericho maintains its strategic focus
on targeting the Mississippi Lime vertically, allowing for stronger
risk-adjusted returns. In addition to the Mississippi
Lime formation, the acquired geology and drilling data suggests the
existence of potentially viable stacked zones up-hole throughout
the acreage.
Allen Wilson, CEO of Jericho,
said, "This LOI shows that our 'patiently-aggressive' acquisition
strategy is starting to pay dividends. After nearly ten
months in which WTI has averaged around $50 / bbl, we are beginning to see seller
capitulation and accordingly, narrower bid-ask spreads. The
acquisition will add high quality production, positive cash flow
and future drilling potential to Jericho's portfolio. We will
continue to seek opportunities with positive operating cash flow
and stacked pay acreage for future drilling in a higher price
environment."
The acquisition is slated to close on or before December 15, 2015.
Further, Jericho has granted an aggregate of 100,000 incentive
stock options to an officer and an employee of the Company. All of
the stock options are exercisable at a price of $0.40 per share for a period of 5 years. The
stock options have been granted under and are governed by the terms
of the Company's incentive stock option plan.
About Jericho Oil Corporation
Jericho is focused on growth through consistent, predictable and
repeatable high margin conventional oil production by bringing new
and proven technology to legacy, onshore basins in the U.S. Jericho
has acquired a 50% interest in 8,100 acres and 200 gross BOED in
the Mid-Continent and is actively seeking additional properties in
the region. Jericho recently signed an LOI for just over 10,000
acres and 119 BOED in Central Oklahoma. For more information,
please visit www.jerichooil.com.
Cautionary Note Regarding Forward-Looking Statements
This news release includes certain "forward-looking statements"
within the meaning of the United States Private Securities
Litigation Reform Act of 1995 and Canadian securities laws. There
can be no assurance that such statements will prove to be accurate
and actual results and future events could differ materially from
those anticipated in such statements. Important factors that could
cause actual events and results to differ materially from Jericho's
expectations include risks related to the exploration stage of
Jericho's project; market fluctuations in prices for securities of
exploration stage companies; and uncertainties about the
availability of additional financing.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
SOURCE Jericho Oil Corporation