In a statement to shareholders, Entek said it had exercised its option to acquire Emerald, with the transaction set to be completed next month.
Entek will issue Elixir up to 200 million convertible preference shares valued at $0.015.
The transaction stems from an agreement entered in November 2018, with the option to acquire Elixir’s Alaskan leases exercisable on or before 31 January.
If successful, the transaction will expand Entek’s North American footprint with the Perth-based company already holding acreage in Wyoming’s Green River Basin.
Entek executive chairman Mark McAuliffe said the decision to move ahead with the acquisition marked the culmination of an extensive evaluation of potential suitable projects.
“Entek is excited to be taking a significant position in one of the most active and prospective oil plays now developing on the North Slope,” he said.
Upon completion of the transaction, Elixir managing director Dougal Ferguson will assume the role of managing director at Entek.
Highly prospective leases
The deal, which is subject to regulatory and shareholder approval, will enable Entek to acquire Elixir’s total North Slope lease holding of 35,423 acres.
Emerald has also recently been announced as the highest bidder on 114,310 additional acres in the area.
Elixir’s three Alaskan leases are in the highly prospective Nanushuk oil play, currently the latest global hot spot for conventional oil exploration. The area hosts the giant Willow oil field discovered by ConocoPhillips in 2017.
In addition to the Willow discovery, the Pikka/Horeshoe find to the north east is reported to host a resource of 500 million barrels of oil.
This oil-rich area is undergoing a flurry of appraisal, with Oil Search (ASX: OSH) aiming for production in the North Slope by 2023. Meanwhile, immediately to the south of the leases, sits the undeveloped Umiat field.
Following completion of the transaction, Entek will immediately begin geochemical analysis of the leases to progress its understanding of the maturity of source rocks.
Existing 2D seismic already indicated the existence of stratigraphic reservoirs similar to those observed in the Willow field.
Entek shares soared 40% to $0.014 while Elixir shares were unchanged at $0.035.