Photo by: Bloomberg
PERTH (miningweekly.com) – Junior Ardent Resources has moved to acquire privately held Shale Energy, which has oil and gas production assets in the US.
Under the terms of the agreement, the ASX-listed Ardent would acquire Shale Energy in exchange for 208-million of its own shares.
“The acquisition of Shale Energy provides an excellent opportunity for Ardent to gain exposure to one of the world’s most sought-after oil and gas provinces. The fact that Shale Energy is already in production generating small, but meaningful income in North Dakota makes this a compelling transaction for our shareholders,” said Ardent chairperson Scott Brown.
Shale Energy has three separate tenements in North Dakota, containing three producing wells with permitting and application for at least a further 28 wells.
The Australian company has a growing production profile with a net oil production expected to rise from its current 25 bbl a day to over 250 bbl a day by mid-2016, without any further acquisitions.
“Our immediate priority upon the completion of the transaction is to increase the number of barrels of oil being produced per day. We are confident that with the partnerships currently in place with established US oil and gas players, there is a good foundation to build the company’s production profile,” said Brown.
Shale Energy director Richard Pritchard said the transaction would provide the unlisted company with the ability to take full advantage of growth opportunities that existed across its portfolio of assets.
“We see significant upside in the near term and merger and acquisition opportunities will also allow us to further improve our reserve profile and valuation.”
As part of the transaction, and subject to shareholder approval, Ardent would undertake a capital consolidation of its shares, at a ratio of 11 to 1, to meet ASX requirements.
The company would also undertake a capital raising to raise a minimum of A$2.5-million, and a maximum of A$3.5-million, as a condition of the transaction.