Business Context and Reporting Period
This Form 8-K was filed by RAM Energy Resources, Inc. on May 15, 2007. The report details the completion of an asset acquisition by its wholly owned subsidiary, RAM Energy, Inc.
Key Financial Metrics and Transaction Details
- Transaction Type: Acquisition of oil and gas leases in the Permian Basin (Southeast New Mexico and West Texas).
- Assets Acquired: 120 wells with a 100% working interest; RAM Energy is now the operator.
- Purchase Price: $18.5 million (subject to customary closing adjustments).
- Production Volume (January 2007): 232 barrels of oil per day and 290 Mcf of natural gas per day.
- Historical Cash Flow: Net cash flow from acquired wells for the twelve months ended December 2006 was $4.1 million.
Material Changes
The filing reports a material expansion of the company's asset base through the purchase of 120 wells from Layton Enterprises, Inc. This transaction increases the company's operational footprint in the Permian Basin and adds immediate production capacity.
Guidance, Outlook, and Risks
The filing does not provide updated financial guidance, management outlook, or specific risk factors related to this transaction. The purchase price is noted as subject to customary closing adjustments, which represents a minor contingency.
Investor Verification Checklist
- Verify the final purchase price after customary closing adjustments.
- Confirm the current production rates of the 120 wells compared to the January 2007 baseline.
- Assess the impact of the $18.5 million expenditure on the company's overall liquidity and debt levels.
- Review the terms of the agreement with Layton Enterprises, Inc. for any earn-out provisions or liabilities assumed.