Xtract Energy shares suspended ahead of Elko takeover

Shares in AIM quoted oil and gas investor Xtract Energy (LON:XTR) were suspended from trading this morning ahead of a reverse takeover involving the company’s main subsidiary, Elko Energy Inc. Xtract has offered to buy Elko outright in a move that will transform it from an investing company to one focused on operations. Once the deal has completed Xtract will resume trading on AIM.

The all-share deal will see Xtract issue seven of its own shares for every single Elko share. Presently Elko has 100,010,049 common shares in issue of which 49,975,000 are owned by Xtract. The transaction requires shareholder approval although it is understood that Xtract has already received commitments to vote in favour of the acquisition from the directors of Elko who own Elko common shares and major shareholders, together representing 66.4% of the shares in issue. Last year the Xtract board was substantially restructured, with Peter Moir, the president and chief executive of Elko, appointed CEO in July and in October, Alan Hume, the CFO of Elko, joining as group finance director.

Peter Moir said: “We have focused our time on rebalancing the asset portfolio of the company and the acquisition of Elko is the logical next step in this process. Xtract has a clear vision and solid strategy to create a platform for sustainable growth with significant near term operational upside potential for shareholders. The board looks forward to completion of the acquisition and the re-admission of Xtract as an operating company on AIM.”

Elko has interests in exploration and production licences in the Danish and Dutch North Sea. Its major asset in the Danish North Sea is a 33% working interest in an exploration and production licence 02/05 and a 33% working interest an adjoining exploration and production license 01/11, close to the prolific Central Graben oil kitchen. Technical work indicates the potential for significant resources on these combined licenses. Elko also holds a royalty interest in gas-bearing license blocks P1 and P2 in the Dutch North Sea.

Apart from Elko, Xtract also holds interests in Extrem Energy in Turkey, Zhibek Resources in the Kyrgyz Republic, an oil subsidiary in Australia and an oil shale joint venture in Morocco.