By Investing.com — Shares of Trio Petroleum Corp skyrocketed by 300% early Thursday following the company’s announcement of a non-binding Letter of Intent (LOI) to acquire a 100% working interest in certain petroleum and natural gas properties from Novacor Exploration Ltd. The acquisition, if completed, would grant Trio Petroleum access to the heavy oil region of Lloydminster, Saskatchewan, an area known for its economical development and low operational costs.
The market’s enthusiastic response comes as Trio Petroleum aims to strategically position itself in one of North America’s most promising heavy oil basins. The company anticipates the potential for long-term production and reserve growth through this acquisition. The properties in question currently have seven producing wells, with a combined output of approximately 70 barrels per day and prospects for expansion.
According to the details provided by Trio Petroleum, the Novacor assets also come with a Reserve Report prepared by Petrotech and Associates, which detailed 91.5 million barrels of total proved and probable oil for the wells in production. There is also the potential for further development through multi-lateral drilling opportunities identified within the Sparky formation.
The proposed acquisition terms include a purchase price of CA$2 million (approximately US$1.4 million), with a combination of cash and common stock of Trio Petroleum. The company has already made a good faith deposit of $65,000 towards the cash portion of the purchase price. While the LOI contains obligations of confidentiality and exclusivity, it is not binding until definitive acquisition documents are signed. Approval by the boards of both Novacor and Trio, as well as sufficient financing for the acquisition, are among the conditions for closing.
Trio Petroleum’s CEO, Robin Ross, expressed enthusiasm about establishing a presence in a region that is home to some of the industry’s largest players. The company plans to expand its footprint aggressively in the area, leveraging Novacor’s operational experience. Ross emphasized the company’s focus on projects that generate immediate cash flow or offer transformative growth potential.
The market reaction suggests investor confidence in Trio Petroleum’s strategic direction and its potential to create value through this acquisition. The LOI will remain in effect until the earlier of the execution of definitive acquisition documents or February 15, 2025, unless extended by mutual agreement of the parties involved.
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