TomCo Energy Plc (LON: TOM) share price rallied 11.3% after its 100% owned subsidiary Greenfield Energy acquired an initial 10% stake in Tar Sands Holdings II LLC (TSHII).
The oil development company had announced the deal in June with the potential to acquire up to 100% of TSHII. Greenfield Energy paid $2 million to acquire the 10% stake.
The company retains the exclusive right to acquire the remaining 90% of the membership interests in Tar Sands Holdings for another cash consideration, with the option being valid up to 31 December 2022.
Furthermore, a new subsidiary of Greenfield Energy has also been granted a lease over approximately 320 acres of the 760-acre site owned by TSHII. The company will pay a nominal consideration and an annual rental fee of $320.
However, the subsidiary will have to forfeit 12% of the net sales generated in barrels of oil, natural gas, and sulphur produced from the leased acreage.
In return, Greenfield Energy’s subsidiary has the exclusive right to explore, drill, mine, and extract oil, gas, hydrocarbons, and other substances found in the Lease Area. The company can also construct the necessary facilities needed to accomplish the goals listed above.
Greenfield Energy used a $1.5 million loan from Valkor Oil & Gas LLC (Valkor) to pay for the 10% stake acquired today. The remaining $500,000 was settled by crediting the deposits made in the past.
The energy company has multiple options to repay the Valkor loan, including allocating a share of the net revenues generated from the oil mining in the area or a cash payment of the principal plus the accrued interest.
Commenting, John Potter, CEO of TomCo, said: “We are delighted to have completed this purchase of an initial 10% stake in TSHII. The acquisition provides Greenfield with a base from which to accelerate its plans to pursue the drilling of certain near term oil production wells and, after that, the acquisition of the balancing 90% of the Membership Interests and its first commercial-scale plant, subject to funding. We expect the permitting process for the production wells to be completed in Q1 2022, following the drilling of three exploration wells intended to occur in December 2021.”
*This is not investment advice.
TomCo Energy share price.
TomCo share price rallied 11.32% to trade at 0.718p, rising from Monday’s closing price of 0.645p.
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