US onshore-focused junior oil firm Northcote Energy announced Wednesday that it has agreed to buy NAP USA, which will see Northcote double its working interest in the Shoats Creek producing oilfield in Louisiana while increasing its interest at Zink Ranch, Oklahoma, by 55 percent.
Northcote said it will pay for the acquisition by issuing shares equal to approximately 29.9 percent of the enlarged company's share capital after the transation. This values NAP USA at approximately GBP 1 million ($1.52 million).
Northcote said that the "low-cost, high-impact" Shoat Creek wells are expected to be the initial focus for the enlarged business.
Northcote Managing Director Randall Connally commented in a company statement:
"The combination of North American Petroleum's US assets with our own creates a larger and stronger company that still retains its focus on the development of its core assets in Oklahoma and Louisiana.
"This transaction makes sense in any environment but particularly in the current low oil price backdrop. We believe bulking up production, revenues and assets without having to increase our cost base makes considerable sense and will allow us to realise higher per barrel margins on many projects and to internalise more cash flow for funding overhead and development expenses.
"Considering our mutual operational interests, we expect the integration of NAP USA Inc. into Northcote's business to be relatively simple and highly beneficial both in terms of cost synergies and cash flow. At the same time we plan to repay the Darwin facility resulting in a larger, still focused company with a simplified balance sheet and substantial low cost conventional opportunities to grow production in 2015."
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