Corcel PLC (LSE:CRCL) shares advanced in Wednesday morning’s trade after the firm announced a deal to acquire onshore oil assets in Angola, including past-producing fields which it plans to reactivate.
The company, in a statement, said it agreed to buy a 90% stake in Atlas Petroleum Exploration Worldwide (APEX), which has interests of between 20% and 35% in a total of seven fields in the Kwanza basin.
Consideration for the deal is pitched at £800,000, paid in shares at a premium price of 0.4p each - which will be ‘locked up’ preventing the vendors to sell for 18 months.
At the same time, current APEX shareholders will also invest in Corcel, buying £282,741 worth of additional new shares.
The transaction sparks the beginning of the company’s “pan-Angola/Brazil strategy”, Corcel explained to investors.
It said the acquisition gives it the opportunity for two brownfield developments with the Tobias and Galinda projects estimated to host some 85mln barrels of remaining contingent oil resources (equating to around 16mln barrels net to Corcel post transaction).
The acquisition assets are also deemed to host exploration potential estimated by APEX in the order of 1.4bnbarrels (gross unrisked P50) prospective resources, which would boil down to around 297mln barrels net to Corcel.
"I am delighted to announce this first acquisition in our oil and gas strategy, providing a strong initial platform on which to progress our pan-Angola/Brazil growth strategy,” Corcel chair James Parsons said.
“The metrics on this acquisition are compelling for Corcel shareholders and the window is now open for rapid further consolidation onshore Angola alongside new asset acquisitions in Brazil.
“I look forward to being in Angola later this week with our partners for the licence signature and award ceremonies.”
Parsons added: “The Kwanza basin has been producing for 35 years, is a well understood petroleum system and has both significant scale and upside.
“Corcel sees significant opportunities to increase the legacy operator estimated resources given the structural configuration of the basin and recent new structural mapping.
“We also see large stratigraphic and structural pre salt structures on blocks, analogous to the offshore Cameia discovery. Our initial focus will however be on quickly securing first oil and revenues through our redevelopment opportunities."
In London, Corcel shares were up just over 9% changing hands at 0.34p each.