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The word ‘transformative’ is quite often used, and suggests that a particular deal or find may have significantly changed a company’s fortunes. For Canadian Overseas Petroleum (CSE:XOP / LSE:COPL), its acquisition of the Wyoming-based Atomic Oil & Gas company has transformed it from an oil and gas exploration and development company to one that is now also in the business of production.

More than that, the acquisition is proving itself to be “a jewel of an asset”, as Arthur Millholland, CEO and President of COPL, described it to The Armchair Trader, as for a price of $54m the deal came with 31 million barrels of proved and probable reserves. And the timing of the deal was pretty good, too: at the time the deal was agreed, in December 2020, the oil price stood at $37/bpd; since then the oil price has rallied to today’s $69/bpd (11 September). The deal represents a return on investment of more than 50%, with a $2.18/bpd acquisition cost against a value of $7.52/bpd at net present value (10%).

 

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

James Norris

James Norris

James is a highly experienced writer and editor, gained from more than 20 years in the financial services industry, in particular wealth management and asset management.

He initially worked as a financial journalist for a number of leading media brands, including the FT Group, Financial News, Euromoney and Incisive Media, covering most aspects of the asset management industry. More recently, James switched to work as an in-house content specialist for fund management and wealth management groups, including JP Morgan Asset Management, Quilter Cheviot Investment Management, AXA Investment Managers and Invesco Perpetual.

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