Canadian Overseas Petroleum Ltd (LON:COPL)(CSE:XOP) announced the acquisition of Atomic Oil and Gas is expected to close on Tuesday.
The Atomic deal is worth a total of US$54mln, comprising a US$1mln deposit, US$26mln of assumed debt, US$23mln of debt and cash payments, plus US$4mln in shares.
READ: Canadian Overseas Petroleum raises £14mln to hit the ground running with Atomic assets
In December, COPL described it as a game-changing acquisition. It delivers producing assets in the US state of Wyoming, the Barron Flats Shannon Unit (57.7% owned by Atomic) and Cole Creek Unit (66.7% owned by Atomic).
The two fields have 31.1mln barrels of proved and probable reserves and are at the start of a 40-plus year life. The company noted that the acquisition offers a return on investment in excess of 50%, with the deal pitched at an acquisition cost of US$2.18 per barrel versus a net present value of US$7.52 per barrel.
Barron Flats is producing around 1,400 barrels per day (bpd), up from 200 bpd in 2017, and is forecast to reach a plateau rate of 5,000 bpd gross by 2022 whilst Cole Creek is forecast to have a 3,500 bpd plateau by 2026.
"The Denver Colorado area, where Atomic is headquartered, and the western states were impacted by a severe winter storm yesterday which caused disruption in the process of the transaction completion,” said Arthur Millholland, president and chief executive of COPL, in a release.
“It is on track to happen today and we are excited to finalise the process."
In a further statement on Tuesday afternoon, COPL noted that once the acquisition completes and becomes fully unconditional, the listing of its common shares will be immediately suspended.
An application for the cancellation of the company's admission will be made immediately and the listing is expected to be cancelled 20 business days thereafter.
COPL added that it plans to publish a prospectus as well as an application for the common shares in the capital of the enlarged entity to be admitted to trading on the London Stock Exchange's Main Market for listed securities, once the requisite financial information relating to Atomic has been consolidated and reported.
Shares advanced 6% to 0.37p early on Tuesday.
--Adds afternoon update--