Cabot Energy PLC (LON:CAB) is to increase ownership of its Canadian assets, acquiring a 25% stake that it didn’t already own in a deal worth US$8.71mln.
At the same time, it is raising US$16.5mln of new funds through a share sale, with new shares priced at 5p each.
READ: Cabot Energy continues to grow production in Canada
The transaction will see Cabot acquire High Power Petroleum, which also owned an option to acquire a further 25% stake.
In approval of the transaction announced yesterday, Cabot should enter the New Year with approximately 1,000 bopd, $17m in cash reserves and a development programme targeting a doubling of production by the end of 2018.
— Cabot Energy (@CabotEnergy) December 20, 2017
Cabot said there is a strong commercial rational for the transaction, and that it is preferable to the company to have the benefit of a 100% interest in the assets.
Funds raised in the share subscription, placing and open offer will cover the acquisition costs as well as support the winter and summer work programmes in Canada, the company said in a statement.
Post-acquisition, the company expects to have production of between 800 and 1,000 barrels of oil per day and the planned operations are expected to double output – the target for the end of 2018 is now set at 1,600 to 2,000 bopd.
"The company has made real progress over the last three years, investing in the development of our asset base which has created a solid foundation for future growth,” said Keith Bush, Cabot chief executive.
READ: Cabot Energy confirms talks over possible £15mln funding
“The tougher times of the recent years have provided opportunity that Cabot has taken advantage of to firmly position the company on a strong growth trajectory.”