Acquired assets expected to deliver attractive payback and achieve a production rate of 1,000 barrels of oil per day by the end of the third quarter of 2020
Reiterating commitment to value creation and growing via multi-industry holding company strategy
Exploring a potential near-term uplist to a national exchange
FRISCO, Texas, June 11, 2020 (GLOBE NEWSWIRE) -- Ecoark Holdings, Inc. ("Ecoark") (OTC: ZEST), announced that it has completed an acquisition of certain energy assets from an energy company, whose identity will be released in the future, in the process of bankruptcy reorganization. The all-cash transaction, with a projected short-term payback, includes the transfer of 262 total wells in Mississippi and Louisiana, approximately 9,000 acres of active mineral leases, and significant drilling and production materials and equipment. The 262 total wells include 57 active producing wells, 19 active disposal wells, 136 shut-in with future utility wells, and 50 shut-in pending plugging wells. Included in the assignment are four wells in the Tuscaloosa Marine Shale (“TMS”) formation. The acquired assets are expected to achieve a production rate of 1,000 barrels of oil per day (“BOPD”) by the end of the third quarter of 2020 when considering the acquired asset’s current production, planned production, and planned re-entry projects.
“We are excited to complete this highly opportunistic transaction as we grow our asset portfolio and extend our industry diversification strategy while maintaining a consistent and intense focus on value creation,” said Randy May, Chairman Chief Executive of Ecoark. “This transaction is a continuation of our recent acquisition of the energy assets of Banner Midstream and our ongoing focus on growing through select energy investments to further strengthen our position as a holding company and support our long-term success. The current energy landscape is providing resourceful companies like Ecoark with access to deal flow and unique prospects to selectively invest in the long-term success of domestic energy markets at a highly opportunistic time. We remain committed to expanding Ecoark’s energy portfolio and are currently evaluating the potential acquisition of other high-quality assets under bank or credit ownership.”
“To maximize the value of our latest acquisition, we plan to immediately deploy our existing workover rigs to re-enter some of the shut-in with future utility wells with the most immediate expected production impact and highest economic returns,” said Brad Hoagland, CFA, Principal Financial Officer of Ecoark. “We expect that these actions focused on advancing our production profile, combined with modest additional investments, will generate approximately six-month payback on the growth capital deployed. The current positive free cash flow generated from the acquired active producing wells and the minimal capital expenditure estimated to bring additional production wells back online is expected to drive further improvement in Ecoark’s overall profitability. As commodity price volatility subsides and we establish a reliable production baseline, we will explore implementing hedging instruments to efficiently manage risk and consider initiating earnings guidance for our energy operations.”
“With the actions we have taken to date, Ecoark has advanced its position as a growth-oriented, opportunistic holding company,” continued Mr. May. “Today, we maintain a portfolio of three active, wholly-owned operating subsidiaries spanning a range of sectors including technology, financial services, and energy. We remain fully committed to each of our operating businesses and believe that each business will drive value creation through our diversified industry strategy.”
“We have analyzed the various standards to uplist to a national exchange and feel that the company currently unequivocally exceeds, or can exceed, all minimum criteria,” continued Mr. Hoagland. “We are working diligently to complete the filing of our March 31, 2020 Form 10-K and will immediately initiate the various steps to uplist upon the completion of that filing.”
About Ecoark Holdings, Inc.
Founded in 2011, Ecoark is a diversified holding company. The company has three wholly owned subsidiaries: Zest Labs, Inc. (“Zest Labs”), Banner Midstream Corp (“Banner Midstream”) and Trend Discovery Holdings (“Trend Discovery”). Zest Labs, offers the Zest FreshTM solution, a breakthrough approach to quality management of fresh food, is specifically designed to help substantially reduce the $161 billion amount of food loss the U.S. experiences each year. Banner Midstream is engaged in oil and gas exploration, production, and drilling operations on over 20,000 cumulative acres of active mineral leases in Texas, Louisiana, and Mississippi. Banner Midstream also provides transportation and logistics services and procures and finances equipment to oilfield transportation services contractors. Trend Discovery invests in a select number of early stage startups each year as part of the fund’s Venture Capital strategy; we are open-minded investors with a founder-first mentality. Trend Discovery LP has an audited track record of uncorrelated outperformance of the S&P 500 since inception.
Forward Looking Statements
In addition to historical information, this release may contain "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, included in this release that address activities, events or developments that are expected or anticipated to occur in the future are forward-looking statements and are identified with, but not limited to, words such as "anticipate", "believe", "expect", "estimate", "plan", "outlook", and "project" and other similar expressions (or the negative versions of such words or expressions). Forward-looking statements include, without limitation, information concerning possible or assumed future results of operations, including all statements regarding financial guidance, anticipated future growth, business strategies, competitive position, industry environment, potential growth opportunities and the effectiveness of the technology discussed in this release and the effects of regulation. These statements are based on management's current expectations and beliefs, as well as a number of assumptions concerning future events. Such forward-looking statements are subject to known and unknown risks, uncertainties, assumptions, and other important factors, many of which are outside management's control that could cause actual results to differ materially from the results discussed in the forward-looking statements. These risks include, without limitation, the risk of increased competition; the potential inability to grow and manage growth profitably, including that the collaboration between AgroFresh and Zest may not yield the results expected, the technology described herein may not perform as intended, risks associated with acquisitions and investments, changes in applicable laws or regulations, commodities prices, and the possibility of adverse economic, business, and/or competitive factors. Additional risks and uncertainties are identified and discussed in each company's filings with the SEC, which are available at the SEC's website at www.sec.gov.
ZEST FRESH™ and Zest Labs™ are trademarks of Zest Labs, Inc.
After googling Ecoark and digging into their Banner Midstream and upstream dealings, my gut reaction is that this set of O&G assets is a dumpster file waiting to happen.
I don't see the leadership in Ecoark to address all the apparent liabilities that are present in this 262 well package.
I wish them luck but I wouldn't touch their stock in today's market,
Just my opinion as always.
I value your opinion, Rock Man. Thanks.
Just notice my typo - "dumpster fire" / not file. Fat fingers!
LOL! You get fifteen minutes to "edit" a reply. After that you can correct/amend only by deleting using the small blue "x" in the upper right corner of your reply box and re-posting the corrected reply.
I find the break down in well statuses of interest. This sounds like the assets of a "stripper" operator with the only real value being in the old leases being held my the marginal production. I'm wondering if the 9,000 acres straddles the MS/LA border in some portion of the TMS fairway. I think that Australis recently made a corporate announcement. I'll see if I can find and post it.
"..262 total wells in Mississippi and Louisiana, approximately 9,000 acres of active mineral leases, and significant drilling and production materials and equipment. The 262 total wells include 57 active producing wells, 19 active disposal wells, 136 shut-in with future utility wells, and 50 shut-in pending plugging wells."
I didn't feel like erasing and re-posting the whole thing / I usually catch my errors in the first 15 minutes! LOL
Agree that the well count / breakdown is scary - that is part of the reason for my "prediction". 50 wells waiting on P&A and who knows how many of the "utility wells" with a legitimate plugging liability is a big red flag in my book.
I also question who is the operator on these wells - if this is a non op position, Ecoark will be along for the ride as to what operators want to do with these assets. Unless they opt to staff up and lobby to take over operations on specific wells.
Time will tell as more info comes out on this.
Attached should be the latest Australis presentation.
I'm pretty sure this is what is left of SN's position in the TMS.
Thanks, JR. Things may be starting to move again in the TMS. Just to be clear, SN would be Sanchez Energy?
Correct... it will be interesting to see what they do. Exciting to see the Stateline permit. Looks like another PE backed outfit.... hoping they find the sweet spot.
State Line is a cypher. Can't find any drilling history. I suspect the sweet spot, or spots, have already been largely identified. For me the question is, can State Line come up with a different well model and avoid the problems all the previous operators have encountered and do so in a way that development wells could be drilled and completed economically in a depressed commodity price cycle. I find that a significant challenge.
Looks like they are backed by Juniper Capital https://www.juncap.com/ But I can't find a management team. I'm hoping for the best, but I agree with you... definitely a significant challenge. The system is set up for the first movers to hold large blocks with an initial well... makes for significant development potential, if they can make it work.