14/10/2014 - 12:05

BlackStar to buy Hawkley subsidiaries

14/10/2014 - 12:05

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Perth-based explorer Hawkley Oil & Gas has entered into a binding term sheet for the sale of its Ukraine oil and gas operations to Black Star Petroleum in exchange for 600 million shares.

BlackStar to buy Hawkley subsidiaries
BlackStar's exploration area in Nebraska, USA.

Perth-based explorer Hawkley Oil & Gas has entered into a binding term sheet for the sale of its Ukraine oil and gas operations to Black Star Petroleum in exchange for 600 million shares.

The proposed sale involves Hawkley handing over full ownership of its Janita Global, Ukraine Investments, Ukraine Gas Investments and Prime Gas LLC subsidiaries to BlackStar.

At BlackStar’s current share price, the value of the trade is estimated at $3.6 million.

Hawkley said the shares received from the sale would be distributed directly to its shareholders by way of an in-specie distribution.

Under the terms of the deal, Hawkley will be entitled to appoint one Australian-based non-executive director to BlackStar’s board.

BlackStar said the acquisition, which is still subject to certain conditions and approvals, would provide it with immediate access to cashflow, which it will use to develop its holdings in Banner County, Nebraska.

“It is anticipated that over the course of several months, the cashflow accrued from the Ukrainian activities will be sufficient to allow BlackStar to complete the next phase of its development, being  to drill a third well and fracture stimulate all three wells with a view to commencing production,” BlackStar said in a statement.

Hawkley executive chairman Glenn Featherby said the key management and personnel of the subsidiaries up for sale would remain in place and become a part of the BlackStar structure.

“I believe the proposed sale of the Hawkley subsidiaries will provide Hawkley shareholders with a diversification of project and political risk as a result of becoming shareholders of BlackStar, whose North American oil project has the potential for early production and revenue,” Mr Featherby said.

Hawkley and BlackStar have commenced due diligence on the proposed sale, which is expected to be finalised before the end of the year.

Meanwhile, Hawkley also announced today that former Venturex Resources executive director Anthony Reilly has joined its board as a non-executive director, while its London-based directors Richard Reavley, Graham Lyon and Richard Risby have agreed to immediately resign as part of the proposed sale.

Mr Reilly is also an executive director of Paradigm Metals.

Hawkley’s share price rose by 10 per cent to 1.1 cents per share, while  BlackStar’s share price remained unchanged at 0.6 cents per share at 11:50am.

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