Steeldrum is currently producing at a rate of 200-250 barrels oil daily and has reserves of 5.6mln barrels at the Innis-Trinity and South Erin fields and 1.1mln within the Cory Moruga development project.
Columbus will also get access to two rigs, which can be used to explore its other assets in Trinidad’s South-West Peninsula.
Leo Koot, Columbus’s executive chairman, said Steeldrum’s addition gives it a large well-balanced portfolio of assets strung across the south and south-west of Trinidad.
A US$3.25mln convertible loan facility has been set up with finance group Lind to cover unforeseen integration costs.
Columbus’s own production averaged 553 barrels per day over the quarter to June, with a peak of 648 barrels. The company was cashflow positive during the three months with gross revenues of US$3.01mln and a US$0.94mln operating netback.
Koot said it is addressing sand production issues at the Goudron and still expects output from the field to reach 1,000 barrels a day during the remainder of the year.
Oil should also start to flow from the Bonasse field over the second half with a workover rig on stream from next week. Testing is scheduled to start at the recently acquired Icacos Field.
“We would hope to see gross production across all of our fields grow continually throughout 2H 2018 and continue to grow well beyond that,” said Koot.
VSA maintains punchy target
Broker VSA added that Columbus now has rising production from Goudron and BOLT as well as potential additional production from onshore Trinidad properties alongside the considerable exploration potential at the South West Peninsula.
The total potential value of the consideration is £5.8m, which is expected to be signed off in the fourth quarter, is close to US$1.38/bbl which appears attractive, said the broker.
"The full issue would give the vendors, who have significant expertise in the oil and gas industry, 18% of the enlarged share capital of the company which we believe will align their interests with existing shareholders, enabling CERP to pay a lower up-front fee."
VSA repeated its punchy share price target of 25p, which compares to a price today of 5.05p up 9%.
The broker also points out that the Lind convertible loan facility converts at 8.1p per share compared to a 3p conversion price for a previous facility set up in 2016.