Zargon Energy Trust (TSX: ZAR) said it has entered into an agreement to acquire Churchill Energy Inc (TSX-V: CEI) in a cash and share deal valuing Churchill at approximately C$15.0 million, including the assumption of approximately C$5.8 million of net debt.
For each share held Churchill shareholders will receive either 0.01363 trust units of Zargon for a deemed value of C$0.22, $0.22 in cash or a combination thereof, with the cash payment capped at C$4.6 million. The price represents a premium of approximately 90 percent over the five day weighted average trading price of the Churchill common shares ending on July 27 2009.
Churchill is currently producing approximately 400 barrels of oil equivalent per day of which approximately 61 percent is from the operated Grand Forks, Brazeau and Jarrow/Killam properties in Alberta.
It also controls proved and probable reserves of 0.85 million of barrels of oil equivalent which are comprised of 0.57 million barrels of oil and natural gas liquids and 1.71 billion cubic feet of natural gas.
Churchill has working interests varying from 56 to 100 percent in three medium and heavy oil Mannville and Sawtooth pools in the Grand Forks area of Southern Alberta where significant incremental waterflood and tertiary recovery potential has been identified. It also has a 95 percent working interest in the light oil Brazeau River Nisku I pool of West Central Alberta where significant incremental waterflood recovery potential has been identified.
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