The company has signed letters of intent with two private US oil and gas companies that will see it set up shop over 22,311 net acres in Utah (100% working interest/85% net revenue interest), where it will operate for Anadarko Petroleum, and 356 net acres in the heart of Texas' Permian Basin (66.67% WI/58.3% NRI).

According to APOG, the $11 million deal will give it 90 barrels of oil equivalent per day of conventional production and 23 wells, and there is a clear path to boost that to over 800boepd within 12 months for a minimal outlay.

Almost 20 of the wells were shut-in when the oil price collapsed and once returned to production should produce for up to 20 years at an operating cost of around $US20/bbl.

There are independently certified 1P reserves associated with the properties of 3.2MMbbl and 6.7 billion cubic feet, and 3P upside to 17.2MMbbl in the four Paradox Basin assets and single Texas asset.

As part of the deal the company will secure an existing gas plant and 25-mile pipeline previously developed by Delta Petroleum.

The company will issue 139 million bits of scrip for the deal, which will almost double its paper in the market, and the shares will be escrowed for 18 months.

The sellers, who will own 40% of APOG, will gain two board seats from a total of four positions.

"This is a landmark transaction for American Patriot to acquire Paradox and Permian basin oil and gas assets fundamentally transforms the company putting it on the path to becoming a significant US oil production company with substantial mid-stream strategic assets," American Patriot CEO Alexis Clark commented.

"The production will generate immediate cash flow when the transaction is closed."

It expects to make around $1.3 million this year.

He said the company expected to make other deals, and it had "a number of additional deals in the pipeline".

Clark said it was a once-in-a-generation opportunity to buy assets in the current environment.

"It wasn't for today's low oil price environment and the strict criteria oil bankers have, a company like [APOG] would rarely have an opportunity to acquire assets like these or any other assets we are looking to acquire," he said.

"To acquire theses key production and mid-stream strategic assets of the gas plant and pipeline positions American Patriot well to develop a significant oil and gas production business including the ability to charge third party providers and generate tolling revenue."

Clark said the company was looking to build from 90boepd of production to over 5000bopd, with a target of 1600bopd by the end of 2017.

The transaction is subject to full due diligence and is expected to close within 60 days, after which the company will move to align itself with US investors with a secondary listing on the US OTC market, with the aim to undertake a full listing on one of the major US exchanges within a year.

APOG, which has a market capitalisation of around $15.12 million, was up 20% to $0.10/share this morning.

In August it turned down a $0.22/share offer from US-based Running Foxes Petroleum, when it was still trading at $0.145, and said it wanted to work with RFP to focus on the acquisition of a number of attractive oil production assets within the mid-continent basins of the US.

It was also planning to drill its first well into the Rough House prospect in Colorado.