Oil and gas explorer Xstate Resources has entered into an agreement to acquire a 24.5 per cent stake in a producing onshore oil field in California for $US13 million ($A17 million).
Xstate has entered into a letter of intent to acquire the working interest from an unnamed private group, which currently holds a 50 per cent stake in the Sansinena and East Los Angeles oil fields.
If the deal is successful, the private group will retain a 25.5 per cent stake in the two assets, with Matrix Oil Corp to retain its operator status and 50 per cent interest.
The deal will provide Xstate with a share of existing production equal to 450 barrels of oil per day.
Xstate is expected to reach financial close on the deal by early February.
“This acquisition provides cashflow, production infrastructure and more importantly access to growth opportunities consistent with Xstate’s revised business strategy to generate value for shareholders through low risk field development, appraisal and production enhancement opportunities,” the company said in a statement.
“As a result of this transaction Xstate will develop the ground operational capability and gain access to commercially aligned operational relationships in California, which will enable the identification, purchase and enhancement of additional production opportunities in line with the company’s investment strategy.”
Xstate shares were 20 per cent lower to 1.2 cents each ahead of the close of trade.
