Kelt Exploration Ltd. (TSE: KEL) announced Feb. 23 it will acquire Artek Exploration Ltd. in a business combination agreement for C$307 million (US$243.8 million).

The Calgary, Alberta company said it entered into an agreement to acquire all of the issued and outstanding common shares of Artek, also based in Calgary, on the basis of 0.34 of a Kelt common share for each Artek common share. The acquisition will be effected by way of a statutory plan of arrangement.

The acquisition includes the assumption of an estimated C$89.5 million (US$71.1 million) of net debt as of Feb. 20, and estimated associated transaction costs of about C$5.6 million (US$4.4 million).

The acquisition of Artek consolidates the majority of Kelt's land acreage in its Inga-Fireweed-Stoddart, British Columbia core area to 100%, which is consistent with the company's strategy to operate and control all of its major core exploration and development prospects.

Highlights:

  • Land holdings of 262,254 net acres, of which 202,967 net acres were undeveloped, as of Dec. 31;
  • Production of 5,400 boe/d for January;
  • Proved eserves of 24 million barrels of oil equivalent (MMboe) and proved plus probable reserves of 46.4 MMboe, as of Dec. 31;
  • The Artek acquisition will be accretive to existing Kelt shareholders on a reserves per share, production per share, funds from operations per share and net asset value per share basis; and
  • Acquisition cost, including future development capital costs and estimated associated transaction costs, is $20.46/boe for proved reserves and $12.89/boe for proved plus probable reserves.

In addition, Kelt will gain 100% ownership in key infrastructure including compression facilities and pipelines in the area. The net present value of Artek's Inga-Fireweed-Stoddart reserves at Dec. 31 represented about 90% of Artek's total corporate reserves value.

Completion of the arrangement is anticipated to occur by April 16.