RAM Energy Resources Announces Non-Strategic Asset Sale, Pay Down on Senior Credit Facility, Reaffirmation of Borrowing Base ...
13 Janvier 2011 - 1:30PM
Business Wire
RAM Energy Resources, Inc. (Nasdaq: RAME) today announced it has
closed the sale to a privately-held E&P company of certain
non-operated natural gas properties located in eastern Oklahoma for
$8.0 million in cash. The transaction closed on December 30, 2010.
The sale proceeds were immediately applied to reduce outstanding
borrowings under RAM’s revolving credit facility to $116.5 million
at December 31, 2010. The disposition of these non-core properties
reflects the successful continuation of the company’s
implementation of its previously announced plan to target debt
reduction through selective asset divestitures.
Pay Down on Senior Secured Credit Facility
Also on December 30, 2010, the company made an $8.0 million
voluntary prepayment on the term loan portion of its credit
facility, reducing the outstanding balance under the facility to
$80.2 million. As a result of the application of sale proceeds and
the voluntary prepayment on the term loan, the total amount
outstanding under RAM’s senior secured credit facility has been
reduced to $196.7 million at December 31, 2010, marking the first
time since the company’s 2007 acquisition of Ascent Energy that
senior secured borrowings have dropped below the $200.0 million
level.
Production and Pricing Parameters of Assets Sold
Third quarter production from the properties which were sold
totaled 90,972 MCFE, or 989 MCFE per day, and represented 2.8
percent of RAM’s aggregate third quarter 2010 production. In
addition the sale price represents 4.8 times the third quarter of
2010 annualized operating cash flow from the properties.
Borrowing Base Reaffirmed
As announced on December 9, 2010 prior to this latest property
sale, the company’s borrowing base was reset to $145.0 million.
This latest sale had no impact on the existing borrowing base. As a
result of the sale and application of proceeds, however, RAM’s
effective liquidity has improved to $28.5 million at December 31,
2010.
Restructure of Oil Hedges
Given the momentum of the economic recovery and its potentially
favorable impact on demand and ultimately the price of oil, in
December 2010, RAM initiated new derivative positions as well as
replaced previously existing derivative floors with collars in an
effort to mitigate risk to the company’s anticipated cash flow
stream in 2011 and 2012. The company replaced derivatives covering
701,300 barrels of oil production anticipated during the second,
third and fourth quarters of 2011 with collars containing floors of
$80.00 and ceilings of $105.00. Additionally, RAM added derivatives
covering 364,000 barrels of oil anticipated to be produced during
the first and second quarters of 2012 with collars containing
floors of $80.00 and ceilings of $105.00.
Forward-Looking Statements
This release includes certain statements that may be deemed to
be “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. All statements in this
release, other than statements of historical facts which address
the company’s pursuit of strategic alternatives through debt
reduction, the potential impact from restructuring its oil and gas
derivatives, as well as events or developments that the company
expects or believes are forward-looking statements. Although the
company believes the expectations expressed in such forward-looking
statements are based on reasonable assumptions, such statements are
not guarantees of future performance and actual results or
developments may differ materially from those in the
forward-looking statements. Factors that could cause actual results
to differ materially from those in forward-looking statements
include oil and gas prices, closing adjustments, actions taken and
to be taken by the government as a result of political and economic
conditions, continued availability of capital and financing, and
general economic, market or business conditions as well as other
risk factors described from time to time in the company’s filings
with the SEC. The company assumes no obligation to update publicly
such forward-looking statements, whether as a result of new
information, future events or otherwise.
About RAM Energy Resources
RAM Energy Resources, Inc. is an independent energy company
engaged in the acquisition, exploitation, exploration, and
development of oil and gas properties and the marketing of crude
oil and natural gas. Company headquarters are in Tulsa, Oklahoma,
and its common shares are traded on the Nasdaq under the symbol
RAME. For additional information, visit the company website at
www.ramenergy.com.
Ram Energy Resources, Inc. (MM) (NASDAQ:RAME)
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