Calima Energy Limited (ASX: CE1 / OTC: CLMEF), a key player in the energy sector, has entered into a binding definitive agreement to sell its wholly-owned Canadian subsidiary, Blackspur Oil Corp., to Astara Energy Corp. The deal is valued at approximately A$83.3 million (C$75 million), subject to customary completion adjustments for net debt. This strategic divestment represents a significant financial transaction for Calima, aligning with its objective to optimize shareholder value.

The sale of Blackspur, which owns Calima’s Brooks and Thorsby production assets in Alberta, Canada, is a move that reflects the Board of Directors’ decision to realize the inherent value of these assets. The transaction’s value is about double the current market capitalization of Calima Energy Limited. This move underscores the company’s strategic shift and commitment to financial prudence.

Calima plans to distribute at least 85% of the funds received from the Blackspur Sale to its shareholders in the most tax-effective form. This decision aligns with the company’s commitment to maximizing shareholder returns. The remaining proceeds from the sale are intended to fund future exploration programs and cover ongoing operational and administrative costs.

The sale, subject to Canadian Competition Act approval and shareholder consent, is expected to complete shortly after the Calima shareholders’ meeting scheduled for February 15, 2024. Astara has provided a C$5 million escrow deposit to secure its obligations under the definitive agreement, with a break fee of C$1.75 million potentially payable by Calima under certain conditions.

Post-sale, Calima Energy Limited will retain its Paradise Well asset in British Columbia, which generates significant free cash flow annually. The company will also maintain a substantial cash reserve, positioning it well for future growth and exploration opportunities.

Calima’s decision to sell Blackspur Oil Corp. to Astara Energy Corp. is a testament to its strategic approach in the energy sector, focusing on enhancing shareholder value and ensuring long-term financial stability.

  Astara Energy, Blackspur Oil Corp, Calima Energy