OilVoice - Crimson Exploration to Sell Non-Core South Louisiana Assets

Crimson Exploration to Sell Non-Core South Louisiana Assets

Monday, January 11, 2010

Crimson Exploration Inc. has closed the sale, to a private company, of certain of its operated and non-operated working interests in various producing wells, related production equipment and associated acreage in Allen, Cameron, Calcasieu and Jefferson Davis parishes in southwest Louisiana. The contracted sales price for these non-core properties was approximately $7,800,000, with net proceeds of approximately $7,300,000, after adjustment for oil and gas operations for the period between the effective date and the closing date and other normal closing price adjustments. The purchase and sale agreement provides for up to an additional $2,400,000 in gross proceeds for the sale of additional properties for which various consents are still being solicited. Under the agreement, the Company has 180 days from the closing date to obtain those consents. The sale of these assets represents a strategic exit from all operations in South Louisiana and removes approximately $5.2 million of our total recorded asset retirement obligation at September 30, 2009.

Proceeds received by the Company in this transaction were used to repay outstanding amounts under its revolving credit facility. No adjustment will be made to the maximum borrowing base availability under the Company's revolving credit facility as a result of this sale.

The proved reserves associated with the properties closed on in this transaction represented approximately 7% of the Company's reported September 30, 2009 proved reserves. The Company's share of average daily production from these properties during the third quarter 2009 was approximately 2,900 mcfe of natural gas equivalents per day, or about 7% of the Company's total daily production for the quarter.