Canadian Overseas Petroleum Ltd (LON:COPL) (CVE:XOP) told investors it believes that new measures brought in by President Biden will have a “largely positive” effect on its acquisition of Atomic Oil and Gas.
Biden has inked a new executive order pertaining to America’s federal oil and gas Leases.
COPL noted that it means no new US Federal Oil and Gas Leases will be issued offshore, or onshore through the Bureau of Land Management, additionally, there will be a review of existing leases and permitting for oil and gas operations conducted on Federal lands.
The executive order does not ban hydraulic fracking and legacy suspended wells on Federal Leasehold are to be abandoned to reduce methane emissions.
“The issues surrounding Federal Oil and Gas Leases enacted today by the President of the United States are complicated politically and possibly legislatively,” said Arthur Millholland, COPL chief executive in a statement.
“However, we have done enough due diligence on Atomic and can safely say that the policy enacted today will have no undue influence on Atomic and its assets going forward and have therefore not hindered our resolve to complete the acquisition.”
COPL in December unveiled its transformational US$65mln deal to acquire privately-held onshore US producer Atomic Oil and Gas LLC.
The Atomic deal brings producing assets in the US state of Wyoming, the Barron Flats Shannon Unit (57.7% owned by Atomic) and Cole Creek Unit (66.7% owned by Atomic).
Barron Flats produces around 1,400 barrels per day (bpd), up from 200 bpd in 2017, and is forecast to reach a plateau rate of 5,000 bpd gross by 2022. The Cole Creek asset, meanwhile, is forecast to have a 3,500 bpd plateau by 2026.
Significantly, the fields are at the front end of what’s expected to be a 40-plus year operating life.
COPL, in Thursday’s statement, noted that Atomic’s federal leasehold is in good standing.
Atomic holds 52,250 acres of contiguous leasehold in the State of Wyoming – as a combination of fee simple freehold leases; state leases; and federal leases.
The company also noted that Atomic has secured drilling permits required to continue to conduct the majority of its operations on the critical federal leasehold. Moreover, COPL said that in the future, if federal leases are restricted, operations can be conducted from adjoining leases with directional drilling.
Also, it added that the Atomic assets have new infrastructure and direct access to pipeline with no legacy abandonment or reclamation liabilities.
At Barrons Flat, the facilities are state-of-the-art and environmentally responsible, the company said, with zero gas flaring, minimal methane emissions, and its electricity is sourced from a nearby wind farm.
Millholland added: “The Atomic producing assets are some of the most environmentally responsible oil and gas assets in the industry.
“We see no issues with complying to the policies set forth today by the President, and as such, look forward to be at the forefront of an environmentally responsible participant in the oil and gas industry today and in the future.”