Montana Exploration Corp. said June 24 it will acquire all outstanding shares of Gale Force Petroleum Inc. through an arrangement agreement under the Canada Business Corporation Act.
The arrangement will combine Montana Exploration's acreage in the Shaunavon oil trend and Eagle gas play in Montana with the cash resources of Toronto's Gale Force. There will be no bank indebtedness in the combined entity, which will seek to fund its future drilling program with new equity.
In conjuction with the business combination, Montana Exploration, based in Calgary, Alberta, also entered into an agreement to acquire about 46,000 additional undeveloped acres on the Shaunavon oil trend, which is all of the lands in Montana held by its joint venture partner.
Following closing of the business combination and acreage acquisition, the combined property base will consist of about 135,000 net acres in Montana, a 20% carried working interest in Gale Force’s Pine Mills property in Wood County, Texas, and a 15% membership interest in a limited liability company, which owns producing wells and drilling rights to a 10,000 acre prospect operated by a major oil and gas company in the Marcellus in West Virginia.
Montana Exploration also holds minority working interests in Canadian oil and gas leases located in the Viking Kinsella area of Alberta. The activity of the combined company will be focused upon conventional Shaunavon oil and Eagle gas prospects within the company’s large land base in Montana.
Roche Securities Ltd. was financial adviser to Gale Force for the business combination and provided its board of directors with a fairness opinion. Blake, Cassels & Graydon LLP were legal counsel to Gale Force.
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