US independent Cub Energy said Friday is has agreed to acquire a privately held Ukrainian oil and gas explorer, PrivateCo, for $25 million to increase its existing gas acreage in Ukraine.
Under an all-share deal, Cub will pick up some 70,000 gross acres of undeveloped land close to its core producing areas in eastern Ukraine, increasing its gross net licence acreage in the country to 244,000 acres, the company said.
Cub said it will issue 55.5 million new common shares to PrivateCo valued at $0.45 a share, a 45% increase over Cub's closing share price on March 7.
"We are excited about the acquisition of these licences and believe they add significant quality acreage to our existing portfolio," Cub's CEO, Mikhail Afendikov, said in a statement.
"These three blocks give us a large increase in drilling prospects, excellent resource exposure and further consolidates our holdings in this key area of Ukrainian gas production," he said.
The company said it estimates that the assets hold net 2C contingent gas resources of 9.6 Bcf and net best estimate prospective resources of 82.6 Bcf.
Cub said it plans to begin shooting seismic in the fourth quarter of 2013 and has a licence commitment to began drilling no later than June 2015.
