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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