Australian oil and gas company Calima Energy has agreed to sell its Canadian subsidiary Blackspur Oil Corporation to Astara Energy, for a total of around A$83.3m ($56m).
Blackspur Oil indirectly owns Calima’s Brooks and Thorsby production assets in Alberta.
Calima Energy will retain its Paradise Well asset in British Columbia, which generates around A$350,000 in free cash flow each year.
The Australian company’s Board of Directors recommended the sale and expects the transaction would double its current market capitalisation.
It intends to distribute more than 85% of the transaction proceeds to its shareholders, and the remaining proceeds to fund its future exploration and for ongoing operations and administration.
Astara, a Canada-based oil and natural gas producer, said that the acquisition is fully financed.
Calima Energy chairman Glenn Whiddon said: “For some time, the share price of Calima has not accurately reflected the value of Calima’s oil and gas assets vis a vis our Canadian peers.
“The Blackspur Sale presents an excellent opportunity for Calima shareholders to benefit from this differential. It is the Board’s objective to return the maximum amount of these proceeds to shareholders.
“I wish to thank all stakeholders for their support over the past few years, and importantly the management team and field staff of Calima for their focus and dedication to the company’s assets.”
The sale of Blackspur is expected to be completed within 10 days after the Extraordinary General Meeting, which is expected to occur on 15 February 2024, and before 30 March 2024.
Astara has paid a C$5m escrow deposit to secure its obligations about the definitive agreement, which shall be executed through a Share Purchase Agreement.
The SPA involves a break fee of C$1.75m, which may be paid by Astara if the shareholders do not approve the transaction or receive a superior proposal.
