Xstate Acquires an Additional 10% in Blue Sky's Red Earth Assets
ASX-listed Xstate Resources Ltd. has entered into an agreement with privately-held Blue Sky Resources Ltd. to acquire an additional 10% working interest in its oil-producing assets in the Red Earth area of northern Alberta, for a total consideration of approximately C$844,605, payable in cash and stock.
In November last year, Xstate had entered into an agreement with Blue Sky to acquire a 15% working interest in the oil producing asset in the Red Earth area, for a total consideration of approximately C$464,063.
Under the terms of the current agreement, the total consideration of approximately C$844,605 is comprised of a cash payment of C$700,000, and additional stock consideration of approximately A$150,000 (C$144,605), payable via approximately 10.1 million Xstate shares.
The assets acquired include interests in leases covering 123,000 net acres of producing Keg River Formation properties in the Red Earth area of northern Alberta, located around 450 km north of Edmonton. The properties span across six oil fields and contain 160 producing oil wells. The transaction also includes extensive associated production facilities and oil flow lines, accommodation, produced water disposal facilities and wells, and access roads.
As of December 31st, 2019, total proven (1P) reserves associated with the acreage area was approximately 4.37 million barrels of oil (MMbbls) and proved plus probable (2P) reserves was approximately 6.67 MMbbls. The area has current net average daily production of approximately 1,000 barrels of oil per day (bbls/d).
Headquartered in Fremantle, Western Australia, Xstate is focused on onshore exploration and development activities in the United States, and currently holds interests in the Borba, Dempsey and Alvares natural gas prospects in the Sacramento Basin in California.
Privately-held Blue Sky is based in Calgary, and is owned and controlled by Ilyas Chaudhary. The company recently received its approval from the Alberta Energy Regulator for the transfer of the Red Earth licenses.
The transaction is subject to customary closing conditions and is expected to close before the end of this month.