Entek and Elixir have entered into a binding terms sheet granting Entek an exclusive option to acquire the acreage through the acquisition of a wholly owned subsidiary of Elixir. The proposed transaction structure will see Entek acquire the subsidiary for up to 200 million shares, which Elixir will then distribute to on a pro rata basis to shareholders. 

 

On completion of the transaction Elixir shareholders will hold approximately 40% of Entek and receive one Entek share for each two Elixir shares held, ensuring that Elixir shareholders retain "direct exposure" to the potential of the acreage. 

 

"Over the past year Entek has been seeking a quality major project to revitalise the company and restore shareholder value. The option over the Alaskan leases gives Entek an opportunity to acquire highly prospective leases in an area surrounded by significant discoveries," Entek chairman Mark McAuliffe said. 

 

Earlier this month Elixir managing director Dougal Ferguson told Energy News the company was considering a farm-out partner to develop the three leases on the North Slope. The acreage first caught Elixir's eye in September last year, although it was not until about last July that management started seriously considering the option. 

 

Elixir paid US$800,000 plus a 5% royalty lodgement of a $300,000 performance bond and an option fee of US$150,000 to secure the opportunity for the acreage which is under a lease agreement through until March 2024. 

 

The three leases are situated over what is believed to be an extension of a trend of existing discoveries in the region. ConocoPhillips reported recoverable resource potential in excess of 300mmbbls in the Willow Field nearby. To the north east of the leases the Pikka/Horseshoe field discovery holds 500MMbbls of prospective resources. 

 

Entek reported cash of approximately $4.2 million and no debt or substantial expenditure commitments in its September quarterly. 

 

Entek Energy was up 31% on the announcement this morning with a share price of 1.7c per share. Elixir Petroleum had a share price value of 4.2cps.