Razor Energy has signed an agreement to acquire strategic assets in west-central Alberta, Canada, in a deal valued at $9.6m in cash.
The assets are situated within Razor's core area and characterised by low decline and light oil focused production, which is primarily operated with an abundant infrastructure to complement Razor's existing asset portfolio.
Razor has also filed and obtained a receipt for a preliminary short form prospectus in connection with an offering of subscription receipts of Razor Energy, co-led by Haywood Securities and Jett Capital Advisors.
The cash reserves available with Razor and the proceeds obtained from the prospectus offering will be used to fund the acquisition.
The acquisition is not only complementary on a geographic, geological and operational basis, but also with regard to product mix with Razor's current assets and operations in the Swan Hills areas.
As per a pro forma basis, using field estimated production of February, the company expects to have production of more than 3,700boed, 85% of which will be light oil and natural gas liquids.
This acquisition bolsters Razor's existing asset base with similar reactivation and re-entry opportunities, in addition to future drilling upside with proven deliverability of light oil from the Montney formation.
The assets include primary fields Kaybob South Triassic Units No. 1 and 2, Kaybob BHL (Beaver Hill Lake) Unit No. 1 and Simonette / Karr BHL (Beaver Hill Lake) Oil Pools.
The majority of the 95,679 (33,542 net) of acres of land is under production and the company envisages ample drilling opportunities, comprising both vertical and horizontal wells.
The development of these properties is expected to be part of the 2018 capital programme.
The acquisition is subject to customary adjustments and expected to close on or before 24 May, with an effective date of 1 January.
Razor Energy is a light oil focused company operating predominantly in Alberta.