Reabold Resources announced the acquisition of 100% of Gaelic Resources on Thursday, for the issue of 420 million new ordinary shares
The AIM-traded company said the acquisition would provide it with options to participate in multiple near-term, high-impact oil and gas leases in California.
Following completion of the acquisition, Reabold - through Gaelic - would have the right to earn-in to 50% of the leases by drilling up to five wells by the end of 2019.
It said it expected three of these wells to be drilled before the end of 2018, with the first two - on the West Brentwood and Monroe Swell leases - anticipated to be drilled in the third quarter.
In a success case, those wells would be put into production, providing cash flow for further drilling activity.
The board said the leases were operated by Integrity Management Solutions, which it described as a California operating company that would direct operational decisions pertaining to the licenses.
It explained that the five-well drilling programme earned an operator non-compliant estimated net present value of $235m net to Reabold, and was expected to cost Reabold up to around $7m for the five wells.
The acquisition remained conditional on Reabold convening a general meeting to seek approval of a resolution to authorise the issue and allotment of the consideration shares.
The vendors of Gaelic, who collectively would hold 12.86% of Reabold's enlarged issued share capital, had agreed to a lock-in period in respect of 75% of the consideration shares of six months from the date of issue, and thereafter to orderly market arrangements for a further six months.
"We are extremely excited to be drilling these high-impact opportunities in California," said Reabold co-CEO Stephen Williams.
"These considerably de-risked wells with low drilling costs and a fast path to monetisation are a perfect fit with the Reabold strategy.
"Using Reabold shares to fund the acquisition of Gaelic allows us to preserve cash that can be used for drilling activity, which enhances near-term value-creation."