Zenith Energy Ltd. is acquiring oil wells in the state of Oklahoma from Stateside Energy LLC, beginning its expansion into the US.
Stateside has agreed to sell its production wells to a special purpose vehicle to be established by Zenith under the deal. The resulting company, which will be wholly owned by Zenith and called Newco, will also serve as Zenith’s acquisition arm targeting oil assets elsewhere in the U.S., the City of Vancouver buyer said Friday in a press release
“Zenith will consider offering Stateside the following incentive bonus structure based on Newco achieving the following incremental average production targets: 75, 125, 175 and 225 barrels of oil per day (the ‘Milestones’),” it said in the ad.
“Once each Milestone is achieved, Zenith will consider issuing certain amounts payable to the state through the issuance of equity securities (the “Incentive Bonus Payments”).”
The city of North Miami Beach, Stateside, will also help Zenith find other vendors.
“Newco is expected to negotiate the acquisition of approximately 70 oil production wells located on leasehold properties totaling approximately 3,200 acres located in the State of Oklahoma for sale by an identified third party by Stateside”, Zenith, listed in London and Oslo. said
“The prospective seller has indicated that it also intends to sell certain oilfield service equipment including, but not limited to, a traction unit and a tanker, for an amount to be agreed.”
Stateside’s divestment of its assets is subject to a due diligence assessment to be carried out by Zenith.
Zenith will invest about $2 million for “the acquisition of Targets to be introduced Stateside,” subject to the outcome of the evaluation, according to the statement.
Easy access market
Zenith sees the US as an easily accessible market for its expansion, compared to other countries, in terms of the bureaucratic process.
“We are pleased to formally begin our US expansion through the Stateside agreement. The benefits of operating in North America are readily apparent, and primarily include the speed of transaction execution, with the consequent delivery of a possible immediate oil production at Zenith, and the relatively conspicuous lack of bureaucratic delays and other detrimental impediments to corporate development seen elsewhere,” said CEO Andrea Cattaneo.
The US is seeing proposed legislation that seeks to speed up the permitting process for energy projects and ease other regulatory hurdles. The Building American Energy Security Act and the Underdeveloped Resource Permit Act have now reached the Senate Energy and Natural Resources Committee after second reading.
Meanwhile, pending in the House of Representatives, the Lower Energy Costs Act waives safety-related authorizations for the production of critical energy resources and narrows the scope of environmental reviews under the National Environmental Policy Act. The Republican proposal seeks to ensure the continued development of fossil fuels to increase production and reduce the cost burden on consumers. Repeals taxes on natural gas, resumes onshore oil and gas leasing, and reverses the president’s ban on hydraulic fracturing, among others.
Cattaneo said: “The company is currently negotiating the potential acquisition of several oil producing assets with significant development potential in the US.
“We look forward to completing them in an expeditious manner, subject to rigorous due diligence, leveraging one of our strengths: deal-making.”
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