Trio Petroleum Shares Soar on Oil and Gas Asset Acquisition Plans
Investing.com -- Trio Petroleum Corp shares surged 300% early Thursday after the company announced it had signed a non-binding Letter of Intent (LOI) to acquire a 100% working interest in certain oil and gas properties from Novacor Exploration Ltd. If completed, this acquisition will grant Trio Petroleum access to the heavy oil region in Lloydminster, Saskatchewan, known for its economic development and low operational costs.
The market's enthusiastic response comes as Trio Petroleum seeks to strategically position itself in one of North America's most promising heavy oil basins. The company foresees long-term production and reserve growth potential through this acquisition. The properties in question currently have seven production wells with a total output of approximately 70 barrels per day and present expansion potential.
According to details provided by Trio Petroleum, the Novacor assets also come with a Reserve Report prepared by Petrotech and Associates, detailing a total of 91.5 million barrels of proven and probable oil for the producing wells. Additionally, there are further development opportunities identified through versatile drilling prospects within the Sparky formation.
The proposed acquisition terms include a purchase price of 2 million Canadian dollars (approximately 1.4 million US dollars), consisting of a combination of cash and Trio Petroleum's common shares. The company has already deposited a $65,000 good faith deposit for the cash portion of the purchase price. Although the LOI contains confidentiality and exclusivity obligations, it is not binding until definitive purchase agreements are signed. Approval from both Novacor and Trio boards, as well as sufficient financing for the purchase, are conditions for closing.
Trio Petroleum's CEO, Robin Ross, expressed excitement about having a presence in a region that hosts some of the largest players in the industry. The company plans to aggressively expand its presence in the area, leveraging Novacor's operational experience. Ross emphasized the company’s focus on projects that generate immediate cash flow or offer transformative growth potential.
The market's reaction reflects investors' confidence in Trio Petroleum's strategic direction and the value creation potential through this acquisition. Unless the parties mutually agree to extend the LOI, it will remain valid until the signing of the definitive purchase agreements or until February 15, 2025, whichever comes first.