Xstate Resources Acquires Additional Stake in Blue Sky's Alberta Assets
ASX-listed Xstate Resources Ltd. has signed a binding letter agreement with privately-held Blue Sky Resources Ltd. to acquire an additional 25% working interest in seven oil and natural gas-producing fields located in southern Alberta, for a total consideration of C$1.25 million, payable in cash and stock. Upon completion, Xstate Resources will hold an increased 35% working interest in the fields.
Under the terms of the deal, the total consideration will comprise of a cash payment of C$300,000, and an additional C$950,000 (approximately A$1.02 million) payable by way of issuance of around 255 million Xstate Resources shares, at a deemed price of A$0.004 per share. As a result of the transaction, Blue Sky Resources will become a substantial shareholder of Xstate Resources.
In January 2021, Xstate Resources had entered into a binding term sheet with Blue Sky Resources to acquire a 10% working interest in the same assets, for a total consideration of A$325,000 payable in cash and stock.
The assets acquired include a 25% working interest in seven oil and natural gas fields located between Edmonton and the U.S. border, with principal crude oil properties located in the Jarrow, Bellshill Lake, Hamilton Lake, Little Bow, and Taber areas. The leases covering the fields are crown (Government-awarded) leases and are mostly held by production. A majority of the wells being acquired have been producing for many years, and the producing reservoirs are predominantly conventional sandstone reservoirs.
As of December 31, 2019, the total proved (1P) reserves attributable to the assets were approximately 916.4 thousand barrels of oil equivalent (Mboe) and total proved + probable (2P) reserves of approximately 1.25 million barrels of oil equivalent (MMboe), net to the acquired 25% interest. The acquired assets have current net average daily production of approximately 177.5 barrels of oil equivalent per day (boe/d), of which 96% is oil.
“Our total production in Canada is now 474 boe/d with well over 90% of this being oil, and this production is increasing daily with further low-cost remedial work. Our growing production base is providing investors with significant leverage to improving oil and gas prices,” said Andrew Childs, Executive Chairman of Xstate Resources.
Headquartered in Fremantle, Xstate Resources is focused on onshore exploration and development activities in the United States and Canada, and currently holds interests in the Borba, Dempsey, and Alvares natural gas prospects in the Sacramento basin in California, and certain oil-producing assets in the Red Earth area of northern Alberta.
Calgary-based Blue Sky is currently focused on operations in the Cuthbert, Luseland, and Hearts Hills areas of Saskatchewan, and its Utikuma Lake property in Alberta.
The completion of the transaction is subject to due diligence and signing of a formal agreement, and is expected to close in 30 days, with an effective date of July 1, 2021.