CALGARY — Shares in TriOil Resources Ltd. jumped by more than 13 per cent Thursday on news that it was negotiating a corporate sale with a single party.
The Calgary junior oil and gas producer announced Wednesday after markets closed that a review of strategic alternatives launched in February had resulted in an agreement to deal exclusively with one unnamed bidder.
It said in a news release that negotiations to sell the company or all of its assets will likely continue through to the end of August, adding that it’s not certain the talks will result in a deal.
Its shares on the TSX Venture Exchange closed up 30 cents at $2.60 on Thursday.
In an overnight note to investors, Brian Kristjansen of Dundee Capital Markets speculated the negotiations could be with a foreign entity.
“The demand for exclusivity and the timing may relate to the due diligence required by a foreign entity — potentially including the Chinese, Japanese, Koreans, Indians or Middle Easterners as counter parties, all of which have already established positions in the Canadian E&P space in one form or another and would not be completely surprising,” he wrote.
He added that he expects TriOil to command a price of $2.75 to $3.50 per share ($192 million to $245 million total), well below the Investment Canada Act foreign takeover review threshold.
Analyst Nav Malik of Octagon Capital said TriOil has excellent light oil assets and the bidder could be any company hoping to add to its portfolio.
He said the two months provided for negotiations could simply be the bidder waiting to see more results from the company’s development plan.
TriOil chief financial officer Cheryne Lowe refused to give further information about the bidder on Thursday.
In mid-January, Calgary intermediate PetroBakken Energy Ltd. announced it had added 4.8 million shares of TriOil to bring its total ownership to 11 million shares or 17 per cent.
The company that has since changed its name to Lightstream Resources Ltd. has farmed-in on some TriOil lands in the Lochend Cardium play near Cochrane, fronting the drilling costs in return for a share of ownership.
TriOil also has a Dunvegan light oil play at Kaybob and a Montney liquids rich natural gas resource play at Pouce Coupe.
TriOil’s 52-week stock price high was set at $3.49 on Jan. 31, the day after Calgary activist investment firm Andylan Capital Strategies Ltd. announced it had accumulated five per cent of the shares.
In a news release at the time, Andylan added it had asked the board of directors to initiate a strategic alternatives process and appoint two additional directors to serve on the special committee.
Andylan president John McAleer refused comment when contacted on Thursday.
In an update last week, TriOil said it was producing 4,200 barrels of oil equivalent per day in May, 63 per cent oil and natural gas liquids, on track to meet or exceed its 2013 target and exit at 4,400 boe/d.
It said Lightstream is still the largest shareholder with 17 per cent of the stock, adding that AGF Investments Inc. and Acuity Investment Management Inc., had reported that together they hold 12.9 per cent.