LONDON (ShareCast) - Northcote Energy, an onshore US oil and gas exploration and production company, said Wednesday that it has has exercised two of its options to acquire an additional 10 per cent working interest and an average 2.2 per cent royalty interest in the Horizon Project in Oklahoma.
The move increases the company's working interest in the project from an average of 28.5% to 37.5% and boosted its net revenue interest from 21.4% to 30.1%.
Furthermore, it increases its net attributable oil and condensate proved reserves by 37.4% from 661m barrels to 908.5m barrels and raises its net attributable gas proved reserves by 40.7% from 1,678m cubic feet to 2,361.4m cubic feet.
The Horizon option was exercised for a total consideration of 18.1m new shares of no par value in Northcote and a five year $192,500 promissory note.
The WCR royalty option was exercised for a consideration of $50,000 cash, 5.4 new shares and a five year $49,000 promissory note.
The total share consideration of 23.51m shares represents around 2.64% of Northcote's enlarged issued share capital.
Northcote's Chief Executive Officer Randy Connally said: "We are delighted to have exercised these options to increase our interests in the Horizon Project which will have an immediate positive impact on our net reserves and production and is in line with our stated strategy.
"Importantly it will enable Northcote to increase its exposure to the development programme currently underway across Horizon's portfolio which has already resulted in a doubling of daily production in one well, and is targeting a substantial jump in net production and revenues. This is an important step towards meeting our end of year production target.
"We are also pleased with the vendors' decision to accept the majority of the consideration in equity, which we view as a vote of confidence in our business model and highly experienced team. Looking ahead, Northcote is now better placed to capture more of the potential value uplift achievable through our upcoming fracture stimulation programme which is due to commence late February/early March."
The share price fell 9.33% to 1.70p by 14:45.