14th Jan 2015 08:32
LONDON (Alliance News) - Northcote Energy Ltd shares rose in early trade on Wednesday after the group said it has signed a deal to buy the US assets of North American Petroleum PLC.
Northcote will pay for the acquisition of NAPP USA Inc by issuing shares to North American Petroleum equal to 29.9% of the company's enlarged share issue. It did not provide any details on the pricing of the shares that will be issued to North American Petroleum, but Northcote shares were up 9.7% to 0.225 pence on Wednesday morning.
The acquisition increases Northcote's working interests in two assets, upping its interest in the Shoats Creek project to 70% from 35% and in the Zink Ranch project to 85% from 55%.
Northcote noted the deal is conditional on North American Petroleum raising a minimum of GBP1 million to repay its outstanding loan note from Darwin Strategic Ltd.
"The combination of North American Petroleum's US assets with our own creates a larger and stronger company that still retains its focus on the development of its core assets in Oklahoma and Louisiana," said Northcote Managing Director Randall Connally.
"We believe bulking up production, revenues and assets without having to increase our cost base makes considerable sense and will allow us to realise higher per barrel margins on many projects and to internalise more cash flow for funding overhead and development expenses," he added.
By Sam Unsted; [email protected]; @SamUAtAlliance
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