Eternal Energy Corp. has entered into a letter agreement with Ryland Oil Corporation under which Ryland intends to acquire all of the issued and outstanding shares of common stock of Eternal for consideration of 0.352 of one Ryland share for each Eternal share. The acquisition will be completed by way of a plan of arrangement, as defined by Canadian statutes.
Ryland is a Canadian oil and gas company which, through its wholly-owned subsidiary, Pebble Petroleum Inc. ("Pebble"), owns a significant amount of leasehold acreage located in southeastern Saskatchewan, Canada, on which Eternal owns a 5% gross overriding royalty interest. In addition, Eternal and Rover Resources, Inc. ("Rover"), another of Ryland's wholly-owned subsidiaries, are joint interest partners in approximately 35,000 leasehold acres located in North Dakota and Montana, in which Rover owns a 90% working interest and Eternal owns a 10% working interest. Ryland and Eternal, together with a third party, are also joint venture partners in the Paradox Basin prospect in Colorado and Utah.
The Company currently has approximately 50,550,000 shares of common stock outstanding on a fully diluted basis. Upon closing of the proposed transaction, Eternal stockholders will receive approximately 17.8 million Ryland shares valued by Ryland at $0.36 per share (CDN). Accordingly, the estimated total consideration to be received by Eternal shareholders would be approximately $6.0 million USD ($6.4 million CDN).
The arrangement is subject to the approval of the shareholders of both Eternal and Ryland, as well as court approval. The arrangement is also subject to Canadian and U.S. regulatory approvals and the satisfaction of other conditions that are typical for transactions of a similar nature. The arrangement is also conditional upon Ryland completing a financing to satisfy its trade payables.
"We are pleased to announce our pending arrangement with Ryland Oil Corporation," stated Brad Colby, the Company's President and CEO. "We believe that the combination of Eternal's override position and Ryland's working interests provides a strong basis for delivering future value to our combined shareholders. We look forward to working with Ryland to consummate this transaction as soon as possible."
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