Craft Oil signs agreements to divest Canadian assets

Craft Oil has entered definitive agreements with Cardinal Energy and Point Loma Resources to sell its assets for $41m and $1.6m respectively.

Under the agreement with Cardinal Energy, Craft Oil will receive approximately $4m in cash and nearly four million common Cardinal shares carrying a price of $9.1727 per share.

According to the deal signed with Point Loma Resources, Craft Oil will receive four million common shares of Point Loma at a price of $0.40 per share.

The assets sold to Cardinal Energy include the last quarter of 2016 production of nearly 1,625 equivalent barrels of oil (boe) per day, weighted 36% oil and NGL, located in the Grande Prairie area of Northwest Alberta, Canada.

Subject to customary closing conditions, this divestment to Cardinal will have an effective date of 1 March and is expected to close before 15 March.

Craft Oil also requires shareholder approval for this divestment that comprises significant assets of the company.

Craft Oil has planned to arrange a shareholder meeting in late February this year to secure their consent.

National Bank Financial acted as a financial advisor for Craft Oil for this transaction with Cardinal Energy.

The assets sold to Point Loma comprises last year's fourth quarter production of nearly 410boe per day and are situated in the Judy Creek and Thornbury-Portage areas of Alberta.

This deal became effective on 1 January this year and Craft Oil expects the transaction to close by 17 February.

The agreement is also subject to standard closing conditions.

Craft Oil is currently negotiating with multiple third parties to divest the remaining assets. The company also intends to distribute the proceeds secured from these successful transactions to its shareholders.