Modena Resources (ASX: MDA) has signed a deal to acquire a 14.17% interest in a privately held company in California which has estimated proved and probable reserves of 24 million barrels of oil equivalent.
Modena will issue 24,400,000 million fully paid new ordinary shares to the un-named company at an issue price 15 cents per share. Last price was 9.3 cents.
There is also a deferred consideration equivalent to a value of US$11.5 million, less the value at the completion date of the shares initially issued, payable in cash or new shares of the Company by December 2010, at Modena’s election.
The target company owns production, development, and exploration assets in California
Modena will also seek to acquire up to an additional 5.83% shareholding in the Target on the same basis as above, which could potentially take Modena’s total shareholding in the Target to 20.00%.
The acquisition is subject to completion of due diligence and sale and purchase agreement being finalised.
Modena’s Chairman, Wayne Bellman said the acquisition is potentially a very significant, high‐quality opportunity for Modena; one that could add considerable production and proven reserves and has the ability to deliver substantial value to our shareholders.”
“The Target has a low‐risk, high quality portfolio of oil & gas assets in a geography that we like because it is a large energy market with a long production history and under‐utilized infrastructure."
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