VANCOUVER, British Columbia (AP)
TrueStar Petroleum Corp. plans to acquire a large block of oil and gas leases in the U.S. and will sell its Barnett Shale properties in Texas to help fund the purchases. The Vancouver-based company announced late Wednesday that it would buy the leases in the Williston Basin from Colorado-based C&D Exploration LLC for cash and shares. The leases cover an area of about 277,600 hectares located in northwestern South Dakota, North Dakota and Montana. TrueStar’s net ownership will be approximately 206,000 hectares. TrueStar said it will complete its due diligence and purchases of the leases over the next year. The first leases, comprising about 38,800 net acres, were purchased for $2 million and 22 million TrueStar shares valued at 20 cents Canadian each, the company said. The remaining acreage purchased will be paid for with cash at a price of $60 per net acre. TrueStar said it is negotiating with “several parties” for bridge and long-term financing for the deal, as well as selling its Barnett Shale properties, which the company put up for sale last November. “We are in an area of a blanket oil deposit which, with technological improvements, horizontal drilling, and current oil prices, provides an attractive expansion opportunity,” TrueStar chairman Charles Kohlhaas said in a release. “This acquisition will transform TrueStar by giving us an early-mover position in an expansion area from known fields.” The Williston Basin covers an extensive area of southern Saskatchewan, southwestern Manitoba, western North Dakota, eastern Montana, and northwestern South Dakota. TrueStar is an oil and gas exploration, development, and production company with interests in 33 producing gas wells in the Barnett Shale gas play in Texas and a 10 percent interest in a license for oil and gas development in Guatemala.