- Xstate resources (XST) has acquired a further 10 per cent interest in the Red Earth properties, bringing its total interest in the oil-producing assets to 25 per cent
- The North America-focused oil and gas company will pay Blue-Sky Resources around C$850,000 (roughly A$878,530) in cash and shares for the interest
- The Red Earth properties in Alberta, Canada comprise six oilfields and associated infrastructure
- The Alberta Energy Regulator has approved the transfer of the licences and Xstate expects the acquisition to be completed by the end of the month
- Xstate is up 7.14 per cent, trading at 1.5 cents
Xstate Resources (XST) has acquired a further 10 per cent working interest in the Red Earth oil-producing asset in Alberta, Canada.
The North America-focused oil and gas company will provide Blue-Sky with around C$700,000 (roughly A$723,490) in cash and 10,135,135 Xstate shares, worth $150,000, based on the five-day volume-weighted average price of $0.0148 per security.
The cash component of the acquisition was funded out of existing cash reserves and will bring Xstate’s total working interest to 25 per cent.
The Red Earth asset consists of six oilfields and associated infrastructure, located 450 kilometres north of Edmonton.
The company says the Red Earth properties are producing around one thousand barrels of oil per day and have a reserve of 2.5 million barrels of oil. The additional acquisition means the Xstate share of current production is 250 barrels of oil per day.
The acquisition delivers a blended purchase metric for 25 per cent working interest of C$5279 (approximately A$5456.16) per flowing barrel.
“We are pleased to acquire a further 10 per cent working interest in the Red Earth properties,” said Xstate Managing Director, David McArthur.
“These assets have significant upside, and we will begin the task of increasing production in April 2021.”
Blue Sky received its approval from the Alberta Energy Regulator for the transfer of the licenses and will now move to close before the end of March 2021.
Xstate is up 7.14 per cent, trading at 1.5 cents at 9:45 am AEDT.