Colorado Oil And Gas Workover

My client has acquired producing acreage in the Adena field in the state of Colorado. The current production is approximately 50 barrels/day across 39 active wells. He is searching for $28mm in equity for a workover and reentry.

The goal of the capital is to workover the existing wells to achieve better production and reenter older wells to restart production. Production goals are to achieve 1,000 barrels/day within 18 months, and to aim for sustained production for at least 5 years.

The total well count will look to be 90 wells, and the production of each will be targeted to approx. 15-20 barrels/day. If all wells hit the targeted minimum, my client will achieve 1,350 barrels/day, so we believe a 25% reduction of the goal will sufficiently adjust the risk to the downside.

The investor will receive 97% Working interest, and over the first two years the investor should look to receive $35mm or so from this working interest over 2 years, after landowner royalties, severance, ad Valorum, and operating expenses.

My client is open to a debt hybrid, but would strongly prefer equity.