Alberta-based Xfuels, Inc. announced Monday that it plans to expand its U.S. holdings by adding 516 wells in the midcontinent region including 10 counties in northeast Oklahoma and southeast Kansas, according to a press release.
The company has entered a letter of intent to purchase 100% of the common stock of oil and gas producer, Jubilee Exploration, LLC. It also marks the largest acquisition in Xfuels’ history.
Post-acquisition, Xfuels plans to focus on increasing oil and gas production from a core group of 142 Jubilee wells located in Craig and Nowata counties in Oklahoma. Xfuels expects that production from these wells could be improved to 2,500 MCFD within one year, and over 7,500 MCFD within two years. Annual revenue from these wells could translate to $4,500,000 – $13,500,000, assuming the market price for natural gas remains at or near $5/MCF.
Xfuels will also take over 375 pumping units along with a wide range of other machinery and equipment that was appraised for over $15,000,000 at fair market value in 2018 by Expert Equipment Appraisal LLC.
“The Jubilee acquisition will mark a major milestone for us as we enter the US market,” said Mike McLaren, Xfuels CEO. “We plan to add considerable volume to Jubilee’s current production by applying the same expertise and technology that has served us well in Canada.”
While many of the oil and gas assets in the Jubilee portfolio are now low producing or shut in, Xfuels expects to use Plasma Pulse Technology, along with other leading-edge extraction tools, to bring strategically targeted wells back to life.
Xfuels will be acquiring Jubilee as a wholly owned subsidiary in exchange for 8,000,000 shares of its common stock and $100,000 in cash consideration with conditions, along with a 2.5% gross overriding royalty interest. The GOR will be capped at $1,500,000 and will be payable on all petroleum, natural gas liquids and natural gas mineral interests produced by the wells included in the purchase.
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