Sacgasco and Xstate Farm in to Blue Sky's Red Earth Assets in Alberta
ASX-listed Sacgasco Ltd. and Xstate Resources Ltd. have entered into separate agreements with privately-held Blue Sky Resources Ltd. to acquire a 30% and 15% working interest, respectively, in its oil-producing assets in the Red Earth area of northern Alberta, for a combined consideration of approximately C$1.4 million, payable in cash and stock.
Under the terms of the agreements, Sacgasco will acquire a 30% interest in exchange for a total consideration of approximately C$931,406, comprised of a cash payment of C$600,000 plus an additional A$353,500 (C$331,406), payable by way of issuance of approximately 8.85 million Sacgasco shares.
Simultaneously, Xstate will acquire a 15% interest in the asset for a total consideration of approximately C$466,732, comprised of a cash payment of C$300,000 and additional stock consideration of approximately A$175,000 (C$166,732) payable via approximately 58.3 million Xstate shares.
Post completion of both transactions, Blue Sky will hold a reduced 55% operated interest in the assets.
The transactions 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 6 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. Proven (1P) reserves associated with the acreage are approximately 4.37 million barrels of oil (MMbbls), with current net average daily production reported at approximately 1,000 barrels of oil per day (bbls/d).
“These are long-life assets that strengthen Sacgasco’s production and development portfolio in North America. These assets provide Sacgasco with diversity and resilience that is complementary to the World Class opportunities for natural gas in the Sacramento Basin. The assets are non-operated and are not expected to distract Sacgasco from its operated assets in the Sacramento Basin, especially the planned commencement of the drilling of the Borba Prospect well this year,” said Gary Jeffery, Managing Director of Sacgasco.
Xstate’s Managing Director, David McArthur commented, “This acquisition takes Xstate from an Explorer to an Oil Producer. We have purchased a meaningful portion of these productive fields at a very modest price. The fields are considered mid-life, with the potential to increase and extend their production.”
The transactions are subject to customary closing conditions, including the receipt of approval by the Alberta Energy Regulator (AER), and are expected to close on or before January 31st, 2021.