Alberta-based Lycos Energy Inc. is acquiring private heavy oil producer Durham Creek Exploration Ltd. (DCEL) for total consideration, before adjustments, of $16.67 million (CAD 22.5 million), consisting of $9.26 million (CAD). 12.5 million) in cash and 2.8 million shares of Lycos common stock at $2.63 (CAD 3.55) per share.
Lycos will finance the acquisition through an equity financing of the $18.52 million (C$25 million) purchase agreement, the company said in a press release on Wednesday. The acquisition is expected to close on or before October 16, subject to the completion of the offering and certain customary conditions and approvals, including approval by the Court of King’s Bench of Alberta and the TSX Venture Exchange.
The acquisition includes 35,382 net hectares of land suitable for multilateral development and near Lycos’ recent acquisition of Wyatt Resources Ltd., the company said, adding that it had increased its corporate ownership by 31 percent to 147,956 net acres. Lycos said it has identified more than 70 net Mannville heavy oil multilateral drilling locations on DCEL land, increasing its current development portfolio to 210 locations.
Upon closing of the transaction, Lycos expects production from the assets to average approximately 180 barrels of oil equivalent per day (boepd) — 99 percent crude oil — from a multilateral well drilled at Lindbergh, noting that DCEL’s first well targeted at Waseca. formation achieved an IP30 of 183 boepd. According to the release, the initial results from the drilling of DCEL’s first well support the company’s expectation to be able to deploy its multilateral/fishbone drilling technique to further develop the acquired lands.
DCEL stockholders, representing approximately 83 percent of DCEL’s outstanding common stock, executed written resolutions irrevocably approving the acquisition, according to the statement. All of the Lycos shares issued to DCEL insiders, which represent approximately 81 percent of DCEL’s outstanding shares, will be subject to hold periods and will be issued three, six and nine months after the closing of the acquisition.
Lycos said it expects to increase its 2023 capital spending program to $42.22 million (C$57 million) with the drilling of two to three additional wells targeting the DCEL surface in the fourth quarter. The company’s production guidance remains unchanged with additional drilling not expected to have a material impact on the company’s average production in 2023.
Lycos has signed an agreement with a syndicate of underwriters led by National Bank Financial Inc. in which the underwriters have agreed to purchase for resale to the public, under a purchase and sale arrangement, 7.0 million shares of Lycos at $2.63 (CAD 3.55) per share for gross proceeds of 18 .52 million dollars (25 million CAD). The underwriters will have the option to purchase up to an additional 15 percent of the Lycos shares issued pursuant to the offer at $2.63 (CAD 3.55) per share to cover any over-allotments that may be exercised in whole or in part at any time up to 30 days after closing. of the offer, according to the statement. The offer is expected to close on or before October 16.
Earlier this month, Lycos closed its acquisition of private heavy oil producer Wyatt Resources Ltd. for a total consideration of $6.52 million (CAD 8.8 million), consisting of $4.81 million (CAD 6.5 million) in cash and $1.7 million (CAD 2.3 million CAD). of equity The acquisition includes current production of 400 boepd and significant growth opportunities have been identified on Wyatt’s 12,335 net acres of land, including more than 20 net drilling locations, the company said in a separate press release. The cash consideration for the acquisition was financed through the company’s lines of credit.
The acquisition of Wyatt provides Lycos with an entry point to a new core area in Frog Lake, Alberta, as well as adding numerous locations within the company’s current operations in the Lloydminster area of Alberta, according to the statement from press
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