PICO Holdings (PICO) Unit Closes $10.2M Sale of Oil & Gas Assets
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PICO Holdings, Inc. (Nasdaq: PICO) announced that on October 7, 2016, its Mendell Energy group of companies closed on the sale of a majority of their oil and gas assets, consisting of certain oil and gas lease interests and producing wells in the Wattenberg Field, Colorado, for gross proceeds of $10.2 million. The effective date of the transaction was October 1, 2016. The purchase and sale agreement for these oil and gas assets provides for a Company guarantee to the buyer for $1 million for any indemnification claims made by the buyer within one year of the sale. In addition, there is an escrow holdback of approximately $587,000 for lease title defect issues that the Company has the right to cure within one year of the sale.
The sale transaction will be recorded in the Company’s consolidated statement of operations in the fourth quarter of 2016 which is estimated to result in a gain before income taxes of approximately $8.6 million.
PICO’s President and Chief Executive Officer, John Hart commented:
“Mendell Energy's management team has done an excellent job of maintaining and enhancing the value of our petroleum assets. They also conducted a robust auction and contract process, which allowed us to realize a positive outcome.”
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