Canadian Overseas Petroleum Limited soars on “game changing” acquisition in Wyoming

() shares soared in Wednesday’s early deals after the company unveiled what is described as a  “game changing” acquisition, picking up Atomic Oil & Gas LLC.

The transaction has a reported deal value of US$54mln – comprising a US$1mln deposit, US$26mln of assumed debt, US$23mln of debt and cash payments, plus US$4mln in shares.

It delivers producing assets in the US state of Wyoming, the Barron Flats Shannon Unit (57.7% owned by Atomic) and Cole Creek Unit (66.7% owned by Atomic).

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“This is a game-changing acquisition which will materially reposition COPL as a production company with assets that have a long-term lifecycle and rapid production opportunity,” said Arthur Millholland, COPL chief executive in a statement.

COPL noted that the two fields have 31.1mln barrels of proved and probable reserves and are at the start of a 40+ year life. The company noted that the acquisition offers a return on investment in excess of 50%, with the deal pitched at an acquisition cost of US$2.18 per barrel versus a net present value of US$7.52 per barrel.

Barron Flats is producing around 1,400 barrels per day (bpd), up from 200 bpd in 2017, and is forecast to reach a plateau rate of 5,000 bpd gross by 2022 whilst Cole Creek is forecast to have a 3,500 bpd plateau by 2026.

Millholland added: “Oil production assets of this quality, having an incline curve rather than a decline curve, are rarely available for purchase. Circumstances surrounding the Covid-19 situation created this favourable opportunity for COPL.

“With this acquisition, in addition to the substantial upside potential already present in our Nigerian offshore project, the company is now strategically well placed to deliver enhanced value and returns to shareholders.”

In London, COPL shares were up around 40% in early deals changing hands at 0.26p each.