Trio Petroleum to expand into Lloydminster heavy oil region with strategic acquisition

Trio Petroleum Corp, a California-based oil and gas company, has announced a significant step toward diversifying its portfolio with the planned acquisition of oil and gas assets in Canada’s Lloydminster heavy oil region. The move underscores the company’s strategy to expand operations into a prolific heavy oil basin renowned for its rich reserves and economic development potential.

This acquisition, detailed in a recently signed non-binding Letter of Intent (LOI) with Novacor Exploration Ltd., involves a 100% working interest in producing wells within Saskatchewan. If the acquisition is finalised, it would mark Trio Petroleum’s entry into one of North America’s most promising energy-producing regions, offering immediate cash flow and substantial opportunities for long-term reserve growth.

What Makes the Lloydminster Heavy Oil Region Strategic for Expansion?

The Lloydminster heavy oil region has long been a cornerstone of Canada’s energy production. Known for its abundant reserves, this area is particularly attractive due to its low operational costs and favourable regulatory environment. Its infrastructure and market accessibility have made it a hub for significant players like Cenovus Energy, Canadian Natural Resources, and Baytex Energy.

For Trio Petroleum, entering this established region aligns with its goal of securing assets that deliver immediate production and robust growth potential. The acquisition includes assets in Section 19 and Section 3 of the Lloydminster area, which are currently producing approximately 70 barrels per day (bpd) of heavy crude oil.

Details of the Acquisition Agreement

According to the non-binding LOI, Trio Petroleum will acquire the Saskatchewan oil assets for CA$2 million (roughly US$1.4 million). The payment structure involves US$650,000 in cash, with the balance covered through the issuance of Trio’s common stock. A US$65,000 good-faith deposit has already been made, demonstrating Trio’s commitment to completing the transaction.

The properties include seven wells producing oil from the McLaren/Sparky and Lloydminster formations. Additional opportunities exist to reactivate shut-in wells and pursue multi-lateral drilling opportunities, potentially doubling current production rates.

A reserve report by Petrotech and Associates estimates the total proved and probable reserves for these wells at 91.5 MBBL. If successfully implemented, these enhancements could significantly boost Trio Petroleum’s production capacity and overall profitability.

How Will This Move Impact Trio Petroleum’s Operations?

Robin Ross, CEO of Trio Petroleum, emphasised that the acquisition represents a critical milestone for the company. He highlighted that the Lloydminster heavy oil region is home to some of the largest energy producers, making it an ideal location for Trio’s expansion efforts.

Ross also underscored the importance of the partnership with Novacor Exploration Ltd., noting that Novacor’s operational expertise in the region would be invaluable. Trio plans to leverage Novacor as the operator of these assets, ensuring a seamless transition and robust production growth.

This acquisition complements Trio Petroleum’s existing operations in California and Utah, where the company holds significant working interests in established fields. These include the Presidents and Humpback oilfields in Monterey County, California, and the Asphalt Ridge Project in Uintah County, Utah. The Lloydminster assets add geographic diversity and bring immediate production potential, aligning with Trio’s broader strategy.

Challenges and Considerations

The completion of this acquisition depends on several factors. Trio Petroleum must secure financing to finalise the purchase, and the deal requires approval from the boards of directors of both Trio and Novacor. Additionally, the terms of the LOI may evolve during negotiations, introducing potential complexities.

Despite these challenges, Trio remains optimistic about the transaction, given the region’s economic viability and production potential. The inclusion of proven reserves and opportunities for operational enhancements makes this acquisition a calculated and promising risk.

Why Is This a Landmark Opportunity for Trio Petroleum?

This move into the Lloydminster heavy oil region could redefine Trio Petroleum’s growth trajectory. By entering a market with established infrastructure and significant upside potential, the company positions itself for both short-term gains and long-term sustainability.

The heavy oil market, particularly in Canada, has seen renewed interest due to stabilising crude prices and advancements in extraction technologies. For Trio, securing assets in this region provides a strategic foothold in an industry poised for recovery and growth.

Looking Ahead: What’s Next for Trio Petroleum?

As the February 15, 2025, deadline for finalising the acquisition approaches, Trio Petroleum is focused on aligning its operational and financial strategies to secure the deal. If successful, the company plans to double production from the acquired assets and explore additional opportunities in the Lloydminster region.

This acquisition reflects Trio Petroleum’s commitment to building a diversified portfolio that combines immediate cash flow with transformative growth potential. With a clear focus on creating shareholder value, the company is poised to make significant strides in the North American oil and gas industry.