Australian Oil Company (ASX: AOC) has signed a binding Heads of Agreement with Blue Sky Energy and Power Inc to acquire a 15% interest in 8 gas wells and infrastructure in the onshore Sacramento Basin, Northern California.
This increases AOC’s working interest in the acquired assets to 55%. Consideration was US$220,000, and the acquisition will be effective from 1 January 2014.
At least three separate geologically-independent, high impact prospects have been mapped within the acquired leases, and the gas wells will also provide modest cash flow.
The operator of these wells estimates the remaining gas producible from these wells to be around 1 Bcf; at current gas prices the Net present value is over $1/mcf, or US$1 million.
The transaction is in line with consistent with AOC's strategy to increase exposure to the potential for a major discovery in conventional sandstone reservoirs in the Sacramento Basin.
AOC has also recently streamlined its assets to focus solely on highly prospective onshore California exploration opportunities, which includes a joint venture agreement with Xstate Resources (ASX: XST).
AOC is presently valued at around $12 million.
Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX “Small and Mid-cap” stocks with distribution in Australia, UK, North America and Hong Kong / China.