Magnum Energy has entered into a letter of intent (LOI) to purchase the Viking oil assets of a private company within its core Sedalia Area in Alberta for $2.8m.

The private company is currently producing about 30 barrels of sweet light crude per day from its 100% owned and operated vertical wells situated on 3.25 sections of largely undeveloped land.

In 1968, a unitization study was performed by McDaniel Consultants engineering evaluators, which was submitted to the Energy Resources Conservation Board (ERCB) that indicated an oil resource of five million barrels of original oil in place per section in the Viking ‘A’ Pool.

Cumulative recovered oil production to date has been less than 5% of this estimate, and Viking horizontal wells drilled over the last year along this Viking oil trend have unlocked the remaining recoverable reserves in these pools and improved the economics over vertical development.

This acquisition brings an excellent oil component to Magnum’s economic and growing gas production within its core property, maintaining control of its 100% operated working interest, the company said.