Eagle Energy Trust said July 22 it has entered into an agreement to acquire all the issued and outstanding shares of a private Canadian company (Privateco) for about C$30 million (US$23.1 million), including debt.
Privateco has estimated production from the Twining Field in Alberta of about 750 barrels of oil equivalent per day (boe/d), of which 64% is oil and NGL.
Privateco has been redeveloping the Twining Field with horizontal wells in the Pekisko Pool. This pool is estimated to contain discovered oil initially-in-place of about 900 million barrels, with a current recovery factor of less than 5%.
To date, Privateco has drilled 10 horizontal wells and has built a new battery to handle current and future development plans. It includes more than 30 locations that Eagle anticipates has attractive economic returns in the current price environment.
The acquisition is an important step in Calgary, Alberta-based Eagle's expansion into Canada, said Richard Clark, the company's president and CEO, in the release.
"This acquisition significantly increases our drilling inventory and further supports our key objective of providing sustainable distributions to our unitholders," he said. "These locations provide Eagle with the ability to sustain our production rate of approximately 3,750 boe/d for over five years.”
The transaction will be funded out of Eagle’s existing credit facility of $110 million (US$85 million). It will be completed by the amalgamation of Privateco with a newly incorporated Eagle subsidiary and requires Privateco’s shareholder approval.
The transaction is expected to close by the end of August. Directors, officers and several other Privateco shareholders, owning an aggregate of more than two-thirds of its shares, have signed support agreements to vote in favor of the deal.
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