WellStar to Acquire Producing Canadian Oil and Gas Assets

WellStar Energy Corp. (TSXV:WSE) announced that it has entered into a letter of intent (LOI) with an arm’s length vendor regarding the acquisition of producing oil and gas assets situated in Saskatchewan and Alberta.

The company also revealed plans to complete a non-brokered private placement.

As quoted in the press release:

Pursuant to the terms of the LOI, the Company will acquire the assets in consideration for aggregate cash payments of $3,281,250 (including $1,500,000 upon closing the Acquisition) and the issuance by the Company of 4,000,000 warrants (the ‘Acquisition Warrants’). Each Acquisition Warrant will entitle the vendor to purchase one common share at an exercise price of $0.18 for a period of 48 months following the closing of the Acquisition.

The Assets consist of operated working interests producing approximately 41 net barrels of oil per day from approximately 6,000 net acres in Saskatchewan and Alberta. This includes 3,500 net acres in Saskatchewan prospective for the Bakken formation, with current production from 3 wells in the Red River and Winnipeg Sand formations. Management feels there is significant upside potential to economically produce from the Bakken based on the results from core analysis completed in the most recently drilled well producing from the deeper Red River formation.

The acquisition includes facilities consisting of a salt water disposal well, 5 x 1,000 barrel oil storage tanks and a fresh water source well.

Click here to read the full WellStar Energy Corp. (TSXV:WSE) press release.