Zeta Petroleum to acquire Stikito

Oil and gas exploration and production company Zeta Petroleum has signed a non-binding term sheet to acquire Stikito.

Stikito has a 100% owned interest in four production and exploration licences in the prolific Volga Urals basin in the Orenburg Oblast region of Russia.

According to Zeta Petroleum, at present the licences, which make up the 280km² VES project, produce about 220 barrels per day and estimated proved and probable reserves of 12.8 million barrels of oil equivalent as of 2012.

Located close to the supergiant Orenburg field and the Karachaganak field, the project comprises four previously producing or currently producing licences: Nikiforovskoye; Voinskoye; Veselovskoye; Besedinskoye.

In order to fund the initial upfront acquisition cost, Zeta has signed a heads-of-terms with an existing shareholder to provide a $2m convertible loan.

Zeta Petroleum non-executive chairman Stephen West said that the VES project matches the company’s investment criteria well and would transform its production, revenue and reserves profile.

"At the same time, the opportunity to acquire the VES Project demonstrates our ability to source and gain access to highly attractive projects, as we look to build a leading oil and gas company, and in the process generate value for our shareholders," West added.

Zeta will pay $2m in cash within 15 days of signing a binding legal agreement, and issue 155 million shares that are priced at $0.05 each. If the assets maintain average oil production in excess of 220bopd for 90 days, the company will also pay an addition $1m to the vendor.