Ranger Energy and Blackhawk Resource have signed a non-binding letter of intent, dated July 19, 2010 to amalgamate the two companies, pursuant to a plan of arrangement, into a new company ("Newco") focused on oil prospects in both the Viking and Sparky formations in Alberta. The combined entity, with the property acquisition outlined below, will hold over 38 sections of land at predominantly 100% working interests with over 80 potential drilling locations. Newco has, current production of approximately 125 BOE/day which is expected to increase to over 250 BOE/day by the end of July 2010 (70% oil and 30% gas) and a drilling program that includes horizontal locations in both the Viking and Sparky formations.
Under the terms of the transaction, each shareholder of both Ranger and Blackhawk will receive one share of Newco for every share they hold of either Ranger or Blackhawk. All convertible securities of both companies will be assumed by Newco in accordance with their existing terms and conditions.
Ranger is also pleased to announce that it has signed two separate binding letters of intent with an Alberta based private company, ("Privateco") to acquire, through separate purchase and farm in arrangements, a 100% interest in an additional 14.5 sections of land with Cardium and Viking rights adjacent to its existing 8.75 section block. The combined 23.25 section block contains a highly prospective Viking horizontal oil project. Significant vertical well control exists in the project area which allows excellent definition of the Viking reservoir fairway. For the initial Viking development, Ranger has identified 20 horizontal drilling locations, either on or adjacent to lands with Viking oil production. The agreements commit Ranger to drill 2 horizontal wells on the newly acquired lands. Ranger will issue a non-convertible promissory note to Privateco in the amount of $5.46M as payment for the acquisition. The promissory note will be due on December 1, 2010.
Blackhawk holds over 15 net sections of land with 10 net sections in the Provost area of Alberta where Blackhawk recently successfully completed its first horizontal Sparky oil well. Four horizontal Sparky locations remain in inventory with one scheduled to be drilled prior to year end. Current production is approximately 125 BOE/day and is expected to increase to over 250 BOE/day by the end of July 2010 as the tie-in of previously drilled wells is completed. Production is comprised of 70% oil and 30% gas with the oil production being primarily from its Sparky and McLaren pools in the Provost area. Blackhawk also has interests in producing properties in Wood River and Queenstown in Alberta.
Upon closing of this transaction, Newco's board of directors will be composed of Dave Antony, Scott Price, Ray Antony, Dale Owen, Mike Bowie and John McLeod.
Newco's management team will include all current management of the Corporations plus three new members. The new management members all have extensive oil and gas experience including the drilling and completion of numerous horizontal wells. This team of professionals will be able to fully realize Newco's opportunities within both the Viking and Sparky plays.
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