Dome Energy AB has entered into agreements with PEDEVCO Corp. (NYSE: PED) to sell its entire U.S. asset base, the Swedish company said in a Feb. 25 release.

In the deal, Dome shareholders will receive 140 million shares of PEDEVCO common stock, representing about 64% of the total shares in the newly merged entity containing both companies' assets.

The offer is equal to SEK 1,060 million (US$127.5 million) based on the closing share price of PEDEVCO and the current exchange rate.

PEDEVCO's D-J Basin Acquisition

PEDEVCO, doing business as Pacific Energy Development (PED), also announced Feb. 24 that it acquired about 13,000 net acres in the Denver-Julesberg (D-J) Basin, alomst entirely in Weld County, Colo., from Golden Globe Energy US LLC.

The deal includes interests in 53 gross producing wells (14 operated) and current net daily production of about 500 barrels of oil equivalent per day (boe/d) as of Feb. 7.

PEDEVCO said some of the acreage is located in the prolific Wattenberg core area.

As consideration for the D-J Basin acquisition, PEDEVCO issued shares of its common stock and series A convertible preferred stock. The Danville, Calif.-based company also assumed about $8.35 million of junior subordinated debt from Golden Globe.

As part of the transaction, Golden Globe has a one-year option to acquire PEDEVCO's interest in its Kazakhstan opportunity. The effective date of the transaction is Jan. 1.

PEDEVCO's Divestiture

Additionally, PEDEVCO said it sold on Feb. 19 about 2,300 net acres of its legacy noncore Niobrara acreage to MIE Jurassic Energy Corp. (MIEJ).

The sale included a 20% interest in Condor Energy Technology LLC.

PEDEVCO said it received a premium valuation for these noncore assets and expects to take a $3 million gain on the sale. In addition, MIEJ paid $500,000 toward the paydown of the company's senior note.

Terms Of Dome Merger

Dome said that PEDEVCO's recently closed transaction doubles its cashflow and reserves. This increase in production and reserves has been an integral part for Dome to merge the two companies.

Once the deal is closed, the combined assets are projected to have production of about 3,300 barrels of oil equivalent per day (boe/d), from about 300 wells. The majority of Dome's long-life assets have production hedges in place until the end of 2016/2017 for oil and gas respectively.

Dome said the significant positive cashflow generated from the company together with the lending bank's indicative commitment to increase low-interest asset backed financing, will enable the company to grow organically through the development of the asset base to reach a target goal in excess of 10,000 boe/d.

Management of Dome's U.S. subsidiary, Dome Energy Inc., are expected to join executive positions in the new entity to assist in the ongoing development and growth of the merged company.

Following the completion of Dome's sale of its U.S. assets, the intention is that the net proceeds of the transaction (shares in PEDEVCO) will be distributed to the shareholders of Dome. The board of directors will evaluate alternatives for the continuation of Dome and present a plan at the annual general meeting in May.

Final terms will be presented prior to the annual general meeting and is contingent to board approval, shareholder approval and completion of due diligence from both companies.

Dome said it expects to complete the transaction by June, or by Sept. 30 at the latest.

Paul Morch, Dome CEO, said in a statement, "I'm immensely proud and excited that we are joining forces with PEDEVCO. We have actively been searching for scalable shale assets to complement our existing portfolio. In PEDEVCO we have found a company that has large prime Niobrara acreage in Wattenberg, Colo. This is one of the most attractive basins onshore U.S., due to the good economics at lower oil prices. With a combined portfolio of diversified assets and scalable production, we will be able to continue to create shareholder value in this price environment and thrive in better oil economics."