Calgary, Alberta-based Forent Energy Ltd. executed a letter of intent (LOI) to acquire all issued and outstanding shares of a private resource company (Acquisition Company), also based in Alberta, for CA$1 million, the company said June 3.

Forent will receive about CA$750,000 in cash and CA$250,000 worth of assets from the Acquisition Company. The assets are natural gas production and five sections of mineral rights prospective for Cardium oil.

Forent will pay 2.5 million common shares priced at 40 cents each after the 20-for-1 share consolidation is completed. This consolidation requires shareholder approval at Forent’s annual general meeting on June 4.

The private placement of 2.5 million shares will yield about CA$1 million. The proceeds will support the balance sheet and general corporate purposes. The placement is scheduled to close June 30 and is subject to TSX Venture Exchange and regulatory approval, and shares will have a four-month hold period from the date of issuance.

After the transaction closes, two Acquisition Company management members might join Forent’s board of directors and assist on business development. The acquisition is scheduled to close June 30, pending TSX Venture Exchange and regulatory approvals. Forent said it plans to enter a definitive agreement “in a timely manner.”

Forent Energy Ltd. explores and produces oil and natural gas in Montgomery, Alberta, and other areas in the province.