ADM Energy has formed Vega Upstream JV with Covenant Oil Group to acquire a portfolio of operated and non‑operated oil, natural gas and NGL assets in Oklahoma under a Stock and Membership Interest Purchase Agreement with a base purchase price of c. US$14.9m, and ADM will hold a 50.0% membership and voting interest in the JV and a 10.0% asset interest in the Midcon Assets.
Vega Upstream JV paid a US$500,000 deposit on 28 April and expects to fund the transaction with an institutional credit facility of about US$14m plus US$1m of equity (ADM’s contribution c. US$100,000 inclusive of the deposit), with closing anticipated on or before 31 May and an effective date of 1 February.
“We believe the Midcon Acquisition will be transformative for the Company, with anticipated cash receipts potentially reaching c. US$850,000 over the next twelve months and additional upside from interests in three drilled but uncompleted wells,” said Randall J. Connally, Executive Director.
ADM and COG will each appoint two directors and a co‑president to a four‑member board, Vega Upstream JV will act as regulatory operator in Oklahoma, ADM may increase its economic interest to 35% by topping up capital before closing, ADM will provide administrative services under an at a 20% premium and will receive a US$300,000 acquisition fee paid as US$10,000 per month for 30 months.
The Midcon package includes interests in 28 operated wells and c.250 non‑operated wells, three drilled but uncompleted wells, a 58‑location drilling inventory and a midstream gathering system moving c.4.4 mmcf/d; recent net production is c.3.2 mmcfe/d (533 BOE/d) and ADM’s share of existing production is forecast to generate c. US$850,000 over the next 12 months.
Electric Guitar holds an option to acquire 50% of the operated and midstream assets which would trigger a US$300,000 fee split (ADM US$100,000) and warrants, Eco Oil (60% owned by ADM) may provide services to the JV, COG funded the deposit and is controlled by ADM director Claudio Coltellini, and the other directors, after consulting Cairn Financial, consider the related‑party terms fair.
