Calima Energy (ASX:CE1 / OTC: CLMEF) has entered into a binding definitive agreement with Astara Energy Corp., selling 100 percent of its ownership in its wholly owned Canadian subsidiary, Blackspur Oil Corp., for a cash consideration of $83.3 million AUD or $75 million CAD.
Strategic Sale of Blackspur
The Company believe the value of Blackspur has not been reflected within its market capitalisation on the ASX. This is further supported with the sale value of Blackspur to Astara totaling approximately double the current market capitalisation of the Company.
Although the sale still awaits key conditions, subject to shareholder and Canadian Competition Act approvals, following completion, Calima intends to distribute no less than 85 percent of the sale proceeds to CE1 shareholders.
Shareholders have received $10 million AUD in previous distributions from the Company throughout 2023, demonstrating Calima’s ongoing commitment to its investors.
Shareholder approval will be gauged at the Extraordinary General Meeting, held on the 15th of February. The sale is expected to close within 10 days of this meeting, or, no later than the 30th of March.
The balance of the proceeds will also be employed to fund future exploration programs and pay for ongoing operational and administrative costs.
Divestment of Alberta Assets
Through the sale of its Blackspur subsidiary, the Company will revoke its rights on the Brooks and Thorsby production assets, also known as its Alberta Assets.
However, the Company will retain its Paradise Well asset, held by Calima Energy Inc in British Columbia, which generates approximately $350,000 AUD in free cash flow annually.
Calima Energy Inc additionally has a significant cash balance of approximately $4.1 million AUD, which remains with Calima, together with a $400,000 bond with BCOGC.
Calima Energy’s Chairman Glenn Whiddon commented on the Blacksburg Sale.
“For some time, the share price of Calima has not accurately reflected the value of Calima’s oil and gas assets vis a vis our Canadian peers,” he said.
“The Blackspur Sale presents an excellent opportunity for Calima shareholders to benefit from this differential.”
“It is the Board’s objective to return the maximum amount of these proceeds to shareholders. I wish to thank all stakeholders for their support over the past few years, and importantly the management team and field staff of Calima for their focus and dedication to the Company’s assets.”
CE1’s Australian Stock Exchange-listed share price has risen 56.92% and is currently trading at $0.102 (10.10am UTC+ 8 hours).