88 Energy's (LON: 88E) share price is struggling for direction on Monday after it revealed it has entered into an agreement with Alaska Peregrine Development Company (APDC) to acquire a 50% working interest in Project Peregrine.
Once the acquisition has been completed, 88 Energy will hold a 100% working interest in Project Peregrine, located in the NPR-A region of the North Slope of Alaska.
The company stated that the acquisition will facilitate the continuation of the exploration program at Project Peregrine next winter.
88 Energy will pay $14 million in new 88 Energy shares, to be issued in several tranches. In addition, APDC will receive a 1.5% overriding royalty interest on future production from the Project Peregrine licences.
88 Energy will also pay a $10m cash payment on the achievement of gross 2P reserves of 100 million barrels within 36 months.
88 Energy will also pay:
- Cash payments of $2.5 million per 50 million barrels on the achievement of gross 2P reserves added over 100 million barrels within 36 months (capped at 5 additional cash payments).
- 10% of the gross sale proceeds in respect of an assignment of greater than 49% of Project Peregrine within 24 months, excluding a bona fide farm-out.
88 Energy's Managing Director, Ashley Gilbert, commented: “This is an excellent outcome for our shareholders as we now have full control of the project, including the possibility of further farm-out to a new partner with greater technical and operational capability, ahead of future planned drilling and exploration activity.
“With the additional data we now have in hand, the potential for improved transaction metrics has increased. We also remain optimistic about the future results from the ongoing laboratory tests related to the Merlin-1 well.”
88 Energy's share price has been up and down so far during the session, rallying to highs of 1.25p, then falling to 1.112p. It is currently trading at 1.236p, up 6.5%.
Its Australian listed shares closed the session 9% lower at A$0.02.
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