Shares in Xtract Energy (LON:XTR) shot up after it revealed talks to sell its Julia Creek project in Queensland, Australia are close to a conclusion.
The company said it will sell its oil shale asset to Global Oil Shale (GOS) in exchange for 7.5 mln shares in GOS and A$500,000 in cash.
The deal means Xtract would hold around 7.5% of GOS’ total shares in the event of its planned IPO.
“The disposal of Julia Creek to GOS represents the first action to concentrate the focus of the company,” said Colin Bird, Xtract’s executive chairman.
He added that GOS has all the tools to get the most out of Julia Creek.
Xtract will also have a long-term interest in Julia Creek via a 1% net smelter royalty.
The heads of terms signed also includes a royalty buyback clause.
Julia Creek covers 709 square kilometres and has a JORC indicated and measured resource of 2.18 billion barrels of oil at 61 litres per tonne.
Shares leapt 20% to 0.265 pence.