InPlay Oil Corp. (TSX: IPO) announced on Tuesday that it has entered into a definitive agreement to acquire light-oil Cardium-focused producer Prairie Storm Resources Corp. (TSXV: PSEC). The acquisition is reportedly for consideration of approximately $40.5 million.
The company said the acquisition will be paid through $40 million in cash and issuance of 8.3 million company shares to Prairie Storm at $1.20 per share. InPlay Oil will also be assuming the Cardium producer’s working capital surplus of approximately $9.5 million, resulting in $40.5 million in net acquisition proceeds.
The effect of the acquisition is expected to increase the company’s production to 8,900-9,400 boe/d in 2022 and operating income to $31.0-$33.0 million. The acquired assets also represent a total of 37,995 net acres of Cardium land.
The firm said that the move is in line with its strategy of continued Cardium consolidation and sustainability. Praire Storm mainly operates in the Willesden Green area of central Alberta.
The company is planning to fund the acquisition through a number of financial instruments, including a $10 million bought deal financing with a syndicate of underwriters led by Eight Capital and ATB Capital Markets issuing 8.3 million subscription receipts at $1.20 per receipt; and the commitment from lenders increasing its senior credit facility from $65.0 million to $85.0 million.
InPlay Oil last traded at $1.41 on the TSX.
Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.