Kelt Exploration Ltd. (TO: KEL.TO) entered an agreement to acquire a private, unspecified Canadian oil and natural gas company that has assets at the Valhalla/La Glace areas, adjacent to Kelt’s producing areas at Pouce Coupe and Spirit River in west-central Alberta, the company said June 16.
There are 38,400 gross acres with 60 gross sections, and 32,981 net acres with 51.5 net sections, Kelt said.
The acquisition is scheduled to close July 2, Kelt said. Kelt will pay CA$165 million and will also give the other company’s shareholders 4.3 million of its common shares, Kelt noted.
A $107 million balance will be paid in cash, Kelt added, also noting that its $165 million consideration will be supported through cash on hand.
The Valhalla/La Glace assets currently produce about 2,300 barrels of oil equivalent per day (boe/d), 70% of which is oil and 30% of which is gas, the company said. At these levels, there is about $33.6 million in annual operating income, based on the WTI price of US$95/bbl of oil and $4.50 for natural gas (at AECO indicators), Kelt said.
Total proved reserves were estimated at 6.2 MMboe, with $38.4 million in associated future development capital, the company said. Proved developed producing reserves were estimated at 3.4 MMboe, with $1.5 million in associated future development capital, the company added.
Kelt’s future capex spending for the project would be more than $290 million gross ($280 million net) to work 58 gross (56 net) horizontal drilling locations it has identified, the company said.
Kelt said that after the acquisition, it expects its year-end bank debt to be about $110 million, net of working capital.
Recently, the company’s lenders approved a borrowing base of $170 million and a commitment of $100 million for Kelt’s credit facility, the company said. Kelt noted that it expects to increase the facility after the acquisition.
Calgary, Alberta-based Kelt Exploration Ltd. explores, develops and produces oil and natural gas in western Canada.
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