Whitebark Energy Ltd (ASX:WBE) has executed a sale and purchase agreement to sell its 15% interest in TP-15 – the Perth basin permit containing the Xanadu oil discovery – to Triangle Energy (Global) Ltd (ASX:TEG) for up to $5 million.
The agreement structure allows Whitebark to retain exposure to any commercial success at Xanadu, with a $1 million first oil bonus to be paid on first commercial production.
Whitebark intends to invest initial sale proceeds into new Canadian oil projects where exploration opportunities of over 100 million barrels of oil have been identified.
The Perth-based oil and gas explorer is also progressing negotiations to acquire a new Canadian oil asset.
‘Potential to materially change the company’
Whitebark managing director David Messina said: “While it was a difficult decision to exit Xanadu, we are fortunate that we can quickly invest capital into projects in Alberta, Canada, where costs are much lower, project approvals significantly quicker and the likelihood of timely and substantial commercial returns more predictable.
“In addition, by the nature of the transaction with Triangle, we have maintained exposure to any success at Xanadu via Triangle stock and agreed milestone payments.
“Whitebark will have over $4 million cash to invest in drilling programs and strategic acquisitions in Canada which have the potential to materially change the company within the next six months.
“Whitebark and its Canadian JV partner, Point Loma Resources (TSX-V:PLX), have been in negotiations to purchase production assets with development upside with financial metrics consistent with the company’s previously announced acquisition criteria.”
An upfront consideration of $3 million will be paid to Whitebark by Triangle, consisting of $2 million in cash and $1 million in TEG stock amounting to 11,191,052 shares or about 5% interest.
A further $1 million will be paid following an independent competent person’s report demonstrating that total 2P and 2C reserves exceed 8 million barrels within four years, payable entirely in cash or split between cash and Triangle shares.
A 2P reserve is a proven and probable reserve while 2C is the best estimate of contingent resources.
The $1 million first oil bonus payment requires the sale of more than 1,000 barrels of oil produced from TP-15 within seven years of the transaction date.
Assets in Canada and Australia
Whitebark holds production and exploration assets in both Canada and Australia, with a 20-30% working interest – varied across permits – in the Point Loma joint venture through its Canadian subsidiary Salt Bush Energy Ltd.
It also holds a 100% interest in the 4.4-11.6-trillion-cubic-feet undeveloped Warro Gas Project 200 kilometres north of Perth through its wholly-owned subsidiary Latent Petroleum.