U.S. Energy Corp. (NASDAQ: USEG) said Oct. 10 it sold certain nonoperated Williston Basin assets for about $6.2 million, clearing associated overhang and paving the way for future growth.
As part of the transaction, Denver-based U.S. Energy eliminated $4.2 million, or 84%, of the company's current liabilities, while also retaining $2 million in cash. The buyer of the assets wasn't disclosed.
U.S. Energy's divested Williston properties had a proved reserve PV-10 value of $5.2 million at June 30. However, due to the associated overhang, the company had not received any revenue from the properties since 2015 and was not forecasted to receive further revenue until 2020, said David Veltri, chairman and CEO of U.S. Energy.
Additionally, roughly 75% of the divested acreage for future potential downspacing had been previously sold, Veltri said.
"The successful closing of this transaction represents a major milestone for U.S. Energy," he said in a statement. "We are pleased to have resolved the previously disclosed disputes regarding the divested properties and to have removed the associated overhang that has been detrimental to the company since 2015."
U.S. Energy will use the cash received from the divestiture to participate in organic production growth with "the flexibility to evaluate larger projects in the future," Veltri said.
Founded in 1966, U.S. Energy has nonop interest in about 4,600 net acres primarily in South Texas and North Dakota, according to an August investor presentation.
The transaction closed Oct. 5 with an Aug. 1 effective date, the company said.