Gear Energy (TSX:GXE, Stock Forum), a Calgary-based junior oil and gas firm engaged in the exploration, acquisition, development and production of heavy oil and natural gas reserves in the Western Canadian Sedimentary Basin, announced today that the company had entered into an agreement to acquire heavy oil assets near the company's producing areas of Wildmere, Alberta and Maidstone, Saskatchewan.
According to the news release, the assets include over 2,000 boe per day of high working interest, operated heavy gravity crude oil production at a purchase price of $85.0 million, payable in cash.
The aforementioned acquisition is expected to close on or about May 1, 2014 and is said to fit Gear's strategy of targeting underexploited, geographically focused production with low-risk development locations.
The release went on to note that all the acquired assets produce from heavy oil reservoirs analogous to those that the company had been developing in the area for the past four years and once the acquisition closes, the company expects total corporate production to reach over 7,000 boe per day.
In other news, Gear also announced that it's board of directors approved an increase to the 2014 development capital budget from $70.0 million to $85.0 million with the incremental increase going toward the acquired assets.
Gear Energy was in the new recently when the company announced amendments to its standard by-law and adoption of advance notice by-law in the first two weeks of April.
Shares climbed 11.18% on the news to $5.07 per share.
Currently there are 69.8m outstanding shares with a market cap of $354.0 million.