Kelt Exploration Ltd. (Toronto: KEL.TO) has entered into an agreement to acquire a private Canadian oil and gas company with crude oil and natural gas assets located at Valhalla/La Glace, adjacent to the company's core producing areas at Pouce Coupe and Spirit River in west central Alberta. The acquisition is subject to standard industry closing conditions and closing is expected to occur on or around July 2, 2014.

The consideration to be paid by Kelt is $165.0 million, before closing adjustments, and will be financed by existing cash on hand and the issuance of 4.3 million common shares of Kelt to the shareholders of the private Canadian oil and gas company. Based on the five day volume weighted average price of Kelt shares that traded on the Toronto Stock Exchange from June 9th to 13th of $13.58, the value of the common share consideration is $58.0 million. The balance of $107.0 million will be paid in cash.

Key Attributes of Assets to be Acquired

  • Current net production is estimated to be approximately 2,300 BOE per day (70% oil and 30% gas) from Triassic horizons, primarily from the Montney formation and also including production from the Halfway and Charlie Lake formations.
  • Petroleum and natural gas reserves to be acquired have been evaluated internally by Kelt effective December 31, 2013:
    • Proved developed producing reserves were 3.4 million BOE, with $1.5 million in associated future development capital;
    • Total proved reserves were 6.2 million BOE, with $38.4 million in associated future development capital; and
    • Total proved plus probable reserves were 11.7 million BOE, with $60.7 million in associated future development capital.
  • Long-life reserves with a proved plus probable reserve life index of 14.0 years based on current production.
  • Infrastructure component with interests in major oil and gas facilities including the following:
    • 100% ownership interest in an oil battery, recently upgraded to handle 3,500 barrels of oil per day and 20.0 mmcf of gas per day; and
    • 100% ownership interests in gas compressors and oil and gas gathering pipelines.
  • The Valhalla/La Glace assets include an extensive land position that is a complementary fit geographically to Kelt's existing core areas at Pouce Coupe and Spirit River and are located approximately 18 miles south of Pouce Coupe/Spirit River and approximately 15 miles northwest of Grande Prairie. The acquisition includes 38,400 gross acres (60 gross sections) and 32,981 net acres (51.5 net sections) of land.
  • The Valhalla/La Glace assets will be operated from Kelt's established field office located in Grande Prairie, Alberta.

Kelt is based in Calgary.