Entek negotiates option for Alaskan leases

Dec. 4, 2018
Entek Energy Ltd., Perth, entered into an option agreement with Elixir Petroleum Ltd., also of Perth, to acquire Elixir’s three wholly owned leases onshore the Alaska North Slope. The deal involves an exclusive option to acquire the Alaskan portfolio through the acquisition of a wholly owned Elixir subsidiary. The option is due for exercise on or before Jan. 31, 2019.

Entek Energy Ltd., Perth, entered into an option agreement with Elixir Petroleum Ltd., also of Perth, to acquire Elixir’s three wholly owned leases onshore the Alaska North Slope.

The deal involves an exclusive option to acquire the Alaskan portfolio through the acquisition of a wholly owned Elixir subsidiary. The option is due for exercise on or before Jan. 31, 2019.

If exercised, Entek will issue Elixir up to 200 million convertible preference shares in Entek. The final calculation of the share consideration is based on actual verifiable expenditure incurred by Elixir in its acquisition, evaluation, and exploration of the current leases and any additional leased secured prior to completion. Entek’s convertible preference shares will be valued at 1.5¢ (Aus.)/share.

Entek has agreed to pay Elixir a nonrefundable option fee of $50,000 (Aus.) for grant of the option. If Entek withdraws after 30 days and fails to exercise the option by the end of January next year a further $50,000 break fee will apply.

The leases, covering 35,423 acres, were acquired by Elixir for $803,859 in midyear plus payment of a lease bond of $300,000 to the US Bureau of Land Management. They lie in the National Petroleum Reserve-Alaska (NPR-A) and are valid until March 2024. They are also subject to a 5% overriding royalty interest to the original vendors.

The leases lie south of and on trend with the ConocoPhillips’s estimated 300 million-bbl Willow oil discovery and southwest of the Armstrong Energy-Repsol combine’s estimated 500 million-bbl oil find at Pikka-Horseshoe. Oil Search Ltd. earlier this year closed on the acquisition of 50% of Armstrong’s interest in Pikka-Horseshoe with an option to acquire the remaining 50% (OGJ Online, Feb. 15, 2018). Undeveloped Umiat field lies directly south of the Elixir leases.

On completion of the proposed transaction Elixir will hold about 40% of Entek with shareholders receiving one Entek share for each two Elixir shares. Hence Elixir shareholders will retain direct exposure to the potential of the Alaskan acreage.