Canamax Energy CEO Brad Gabel discusses recent acquisition on BNN
Canamax Energy – (CAC:TSXV) – Canamax has announced an acquisition of properties in Alberta for $24 million. The assets being acquired will add strategic Montney oil assets which will further consolidate its land position in the greater Grimshaw area.
The 2 primary assets acquired are producing assets which will add ~750 barrels of oil equivalent per day to Canamex as well as 110 sections of land. Canamax has initially identified approximately 50 Montney oil horizontal drilling locations on these two new properties.
Both assets acquired provide a strategic fit with the company’s current core Flood property. Flood currently has 16 producing wells and had 100% drilling success in 2014.
“This acquisition further consolidates our position as a leading Montney oil producer in the Greater Grimshaw area,” commented Brad Gabel, the company’s president and chief executive officer. “The contiguous land base at Greater Grimshaw, combined with 100-per-cent ownership interests in the key acreage and facilities in those areas should provide Canamax with significant running room to develop these assets and accelerate the company’s growth rate.”
A 1 year chart of Canamax looks similar to most energy companies. This could be a good opportunity to pick up shares in a company with top quality management who owns 15% (fully diluted) of the stock.
Canamax is led by CEO Brad Gabel who has sold multiple companies in oil space over his 18 year career.
The business model at Canamax is to consolidate small cap energy assets. It would be hard to argue that the timing right now is not perfect with many assets down between 50% and 90% thanks to the crash in the oil price.
Canamax estimates that on closing of the acquisition, the company should have aggregate production of approximately 1,800 boe/d (which includes 150 boe/d of currently shut-in production at Canamax’s Brazeau River property)
The acquisition will be financed through a combination of equity and debt financing and the deal is expected to close before July 31,2015.
To help finance the acquisition Canamax will issue a $15 million dollar financing at 60 cents per subscription receipt.
Read: Canamax to acquire Alberta properties for $24-million
Related (Interview): Canamax Energy CEO Brad Gabel on what’s preventing M&A in the oilpatch
For more information on Canamax Energy, including its risks, read the company’s web site and SEDAR filings