Cloudbreak Discovery PLC (LSE:CDL) has agreed to provide a portion of the acquisition financing for the Masten Unit Energy Project, located in Cochran County, Texas.
The agreement will see Cloudbreak provide G2 Energy Corp with a US$2mln debenture on a two-year term in exchange for a 3.25% overriding royalty interest in the project.
G2 will pay 12% per annum interest to Cloudbreak, calculated and paid quarterly in cash or shares at the discretion of Cloudbreak on the US$2mln debenture.
The Masten Unit Energy Project is a 3,194 net acre producing unit, 100% held by production, located in the giant, billion-barrel Levelland Field in Cochran County, Texas. The Levelland field is situated in the Permian Basin and the producing formation is the San Andres, with an average depth in the area of 1,500 metres.
"This first royalty acquisition highlights the beginning of a great working relationship between Cloudbreak and G2. We are excited to be working with G2 and look forward to additional regional acquisitions, showcasing how our project generator model can be transitioned to the energy royalty sector,” said Kyler Hardy, the president and chief executive officer of Cloudbreak.
"Through this and similar transactions in the future, we see an opportunity to create significant shareholder value by growing Cloudbreak's cash flow through structured deals and portfolio royalty acquisitions in the natural resources sector,” he added.