Victory Energy Corp. (OTCQB: VYEY) is an independent, growth-oriented oil and natural gas exploration and production company focused on the acquisition and development of active oil and natural gas properties throughout Texas. The company’s current portfolio of assets includes interests in various proven formations – including the Spraberry, Wolfcamp, Wolfberry, Mississippian, Cline and Fusselman formations. Utilizing a low-risk vertical well development strategy, Victory Energy aims to follow a predictable and proven business model focused on the acquisition of properties in well-known basins –populated by top-tier exploration and production firms – that are likely to provide return of investment capital in two years or less.
As the price of crude oil has tumbled over the past year to its lowest point in more than a decade, Victory Energy has leveraged operations and investment capital from long-term partner Navitus Energy Group in order to explore growth opportunities presented by punitive commodity pricing environments. While most analysts predict these historic headwinds to persist throughout the remainder of 2016, Kenny Hill, chief executive officer of Victory Energy, stated that current market conditions, coupled with a proposed $75 million credit facility from boutique investment banking firm MLV & Co. LLC, should present tremendous opportunities for the company to scale in the coming months.
“We have worked diligently with our investment banker to review several acquisition targets, holding significant proved producing reserves, limited mandatory development risk and limited lease expiration exposure,” Hill stated in a news release in October 2015. “We are actively working with the sellers to reach agreeable terms and we remain in position to act swiftly and to act in size as additional opportunities with similar low-risk profiles present themselves.”
The company reinforced this hypothesis in November when it entered into a Letter of Intent to acquire 181 net barrels of oil equivalent per day (BOEPD). Victory Energy expects the acquisition to result in roughly 80 percent working interest in three producing wells, as well as about 40 percent working interest in 1,370 net acres that are currently held by production. The company intends to use the significant increase in cash flow resulting from this acquisition to support its continued pursuit of accretive acquisitions made available by the current commodity price environment. The consummation of this acquisition is subject to the completion of due diligence review and approval from certain third parties.
“With a successful completion of this transaction, Victory would grow daily consolidated production from 50 to ~230 BOEPD, a substantial growth which we feel comes at a very favorable value,” Hill continued. “This transaction marks the first of several opportunities that we expect to pursue in the coming year.”
The current commodity price cycle is placing additional pressure on companies in the oil and gas space to sell assets in order to offset revenues lost to low oil prices. This pressure results in a promising opportunity for well-capitalized players to find opportunities to rapidly invest and grow in the oil and gas industry. Benefitting from capital accessible through its partnership with Navitus Energy Group and an acquisition-based growth strategy that’s already being implemented, Victory Energy could be primed to record strong results in upcoming quarters.
For more information, visit www.vyey.com
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