Canadian junior E&P Bowood Energy has made a move towards consolidation of assets in southern Alberta’s emerging Bakken play.
It has a deal to acquire assets in the southern Alberta region from Legacy Oil + Gas, including the sales of 68,581 net acres of Legacy’s undeveloped land for 2 million common shares of Bowood, including the Bowood/Legacy joint venture land.
The current Legacy farm-in agreement with Bowood will terminate on closing of the transaction, which will result in Legacy owning about 37 percent of the outstanding Bowood shares.
Bowood said the combination of assets with the experienced Legacy team will create a high impact, light oil exploration focused junior with a dominant operated position and leverage in the southern Alberta Bakken, opening the way for the emergence of a larger, stronger and balanced producer with the following attributes:
• 155,974 net acres of undeveloped land in the over-pressured oil window in the Alberta Bakken fairway, including a contiguous 60,512 acre block in the Blood Indian Tribe reserve.
• Multi-zone potential.
• Production of about 500 barrels of oil equivalent per day.
• A proven management team with a track record of value creation in junior companies.
• Access to the leading technical capabilities of a much larger company.
Bowood will have first priority
Bowood will be managed by Legacy’s current management team, led by Trent Yanko as president and chief executive officer.
All key Legacy technical, land, accounting and field staff involved with the play since inception will continue to work the area.
Legacy and Bowood have also agreed to an area of exclusion in which Bowood will have first priority over Legacy to pursue any potential acquisition deals.
In addition to two successful wells drilled to date by the two companies, recent disclosure by competitors in the Alberta Bakken has underscored the potential to establish a significant multi-zone light oil resource play.
The new management will also pursue a consolidation strategy within Bowood’s core operating area in southern Alberta, increasing exposure to additional high impact light oil resource plays, while focusing on opportunities to build an inventory of oil development drilling locations complementary to the oil resource play exploration program.
Southern Alberta Bakken interest undervalued
Legacy said its interest in the southern Alberta Bakken is considerably undervalued at the company’s current market valuation.
It said the Bowood agreement has the potential for its shareholders to unlock and realize significant incremental value not currently reflected in Legacy’s share price.
Shareholders of Bowood are expected to be asked for approval to change their company’s name to LGX Oil + Gas. And a consolidation of Bowood shares on a 20-for-one basis.
Legacy production has grown in less than three years to 16,300 boe per day from 500 boe per day.
Yanko was previously president and chief executive officer of Mission Oil & Gas, which built its production to 7,000 boe per day from 500 boe per day in two years, largely due to success in the Bakken play of southeastern Saskatchewan.
