Anderson Energy (TSE:AXL) shares shot up after the Canadian oil and gas company announced plans to reorganize its business, resulting in the sale of shallow gas assets and the receipt of $35 million in non-dilutive financing.
Shares surged 37.5 percent to 16.5 Canadian cents as of 1:15pm ET on Friday.
The company, in a statement released earlier today, said the shallow gas assets it will sell produced about 510 barrels of oil equivalent per day (boe/d) in the third quarter, 95 percent of which was natural gas.
Meanwhile, as part of the restructuring, shareholders will exchange their shares for common shares of a new corporation, on a one for one basis, with Anderson to transfer all of its assets, other than those being acquired by a third party, to the new entity.
The new corporation will also operate under the name Anderson Energy, the company said, and its trading symbols will remain unchanged. It will hold about 92 percent of Anderson's existing oil and gas assets.
The company has already received an indicative term sheet from its banker indicating that on closing of the transaction, it will have access to a $31 million operating loan facility.
The deal requires both shareholder and court approvals, Anderson said. Insiders representing about 11 percent of the outstanding shares have already agreed to vote in favour of the arrangement.
The company said the transaction will significantly improve its liquidity to pursue its Cardium drilling inventory in Willesden Green, and increase its oil and natural gas liquids production weighting, as well as continue its plan to dispose of its non-core shallow gas asset base.
Anderson has budgeted $52 million for its capital program this year, which is focused on light oil and liquids-rich Cardium and Glauconite horizontal drilling in central Alberta, where it is currently undertaking a 13-well horizontal drilling program.
Since the restructuring is not planned to close until early next year, the company said the deal will not have an impact on its 2014 production guidance, which is 3,200 boe/d.