Canadian Overseas Petroleum Limited (LSE:COPL, CSE:XOP) told investors its acquisition of further oil-producing assets in Wyoming is expected to close today.
Picking up Cuda Energy, which is partnered with COPL in assets, will see the company’s interests in three projects rise to between 85% and 100% - and the deal is expected to significantly increase operating cash flow as it adds unhedged production volumes.
COPL’s proved and probable reserves increases by 47% to 38.2mln barrels, whilst the company’s net asset value improves to US$380mln from US$258mln
In addition, the bolstered asset base results in a weightier borrowing base in the American subsidiary’s asset-backed lending facilities.
"I am delighted we have finally completed this acquisition,” Arthur Millholland, COPL chief executive, said in a statement.
“The market continues to misunderstand the full potential of our Wyoming assets. In my near forty years within the oil industry, I have seldom come across assets with such prolific oil and gas potential.
“We now have full ownership which we have secured when the assets are at an early stage in development with everything to play for. With the financing arrangements we also now have in place we look to the future with confidence."
COPL is paying US$19.15mln of cash consideration for the acquisition, along with assuming liabilities estimated to be around US$1.6mln.
It is supported by the convertible bond issue announced last week as well as a planned reserves-based lending financing.
Following the acquisition, COPL sees itself ramping up activity on the ground across its American assets.
The company highlighted that its American deals have been transformative – it now holds majority interests in some 48,000 contiguous acres of leasehold which host more than 40 years of reserves life.
Since the original Atomic Oil & Gas acquisition, in 2021, the company has increased the assets’ production volumes to around 1,600 bpd (restricted presently by facility constraints) from 1,000 bpd. It expects to further unlock production volumes through well optimization, staged facility upgrades, and new well drilling.
The company, meanwhile, today noted that it expects consultant Ryder Scott to next week report its new resource assessment for a ‘major discovery’, announced last year.