Columbus Resources acquires Steeldrum Oil in all-share deal

Oil and gas producer Columbus Energy has signed a sale and purchase agreement to acquire Trinidad-focused firm Steeldrum Oil in exchange for 92m shares worth around £4.7m on the company's current share price.

The deal will add approximately 200-250 barrels of oil per day to Columbus' production levels and 5.6m barrels to its reserves.

Steeldrum's Cory Moruga development project will also add recoverable reserves of approximately 1.1m barrels of oil to the Columbus portfolio.

Steeldrum's assets are all located in southern Trinidad and close to Columbus's existing assets, allowing the company to utilise existing technical expertise and relationships.

Leo Koot, Columbus' executive chairman, said: "The acquisition of Steeldrum is further delivery of Columbus' growth strategy and, on completion, the Company will have a large, well balanced portfolio of assets strung across the south and south-west of Trinidad."

"The portfolio will include low-risk but highly prospective exploration opportunities in the South West Peninsula, a development project in Cory Moruga and 5 producing oilfields (Goudron, Innis Trinity, South Erin, Bonasse and Icacos)."

Columbus' chairman went on to say the acquisition provided the company with "an excellent opportunity to exploit our existing and new assets through operational excellence".

Steeldrum was issued with 92.74m shares in Columbus as consideration.

Looking forward, Columbus said all planned 2018 activities were now fully funded from production revenues and available cash, although the impact of the Steeldrum acquisition may introduce additional financial pressures in the short term but noted that its new short-term convertible security facility with Lind Asset Management would provide it with the ability to drawdown funds to deal with any such pressures if they arise.

As of 1040 BST, Columbus shares were up 10% to 5.12p.