Maha Energy said that its wholly owned subsidiary Maha Energy (US) Inc (“Maha US”) has entered into an agreement to acquire certain oil producing assets in the Illinois Basin, USA, through the purchase of all outstanding shares in Dome AB Inc., a Texas corporation (“Dome AB”), from Dome Energy AB (publ) (the “Seller”).
The purchase price amounts to a cash consideration of US$ 4.0 million adjusted in respect to any working capital in Dome AB at the time of the closing of the transaction, and the assumption of US$ 0.25 million in current liabilities, and the possibility of an additional contingent consideration if certain production and oil price milestones are met, as detailed below.
The acquisition of the Illinois Basin assets strengthens Maha’s production capabilities in the United States, with the addition of a total of 3374.44 net acres of oil and gas leases. The total amount of production of the Illinois Basin assets is currently, as of 1 March 2020, 160 barrels of oil per day and the net debt of the acquired company is zero.
“The acquisition is in line with Maha’s strategy to grow through acquisitions when there is significant potential to create added value for our shareholders. With our strong cash position, we have the opportunity to act in these turbulent times and we are now able to increase our presence in North America and to continue our diversification strategy.” stated Anders Ehrenblad, Chairman of the board of directors of Maha.
Jonas Lindvall, CEO of Maha Energy said: “These light oil (35° API) producing assets are low risk, shallow and solid performing assets. Modern technology coupled with shallow multiple independent oil reservoirs squarely place these assets in the low risk production area of our 40:40:201 portfolio pyramid. The property has sufficient upside to allow for significant production increase. And even though we are reducing our capital spend in Brazil, our strong cash position allows us to pounce on accretive transactions like this without jeopardizing our 2020 production guidance.”
A future contingent additional payment to the purchase price will be made if certain oil price and production level milestones are met before 2023. Maha and its subsidiaries are under no obligation to reach the production level set out in the Production Milestone.
Source: Company Press Release