12:02 PM EDT, 05/14/2024 (MT Newswires) -- New Stratus Energy ( RDRIF ) on Tuesday was up 6.7% on last look after reporting it agreed to buy an initial 49% equity interest in Operaciones Petroleras Soledad, a private Mexican oil and gas company.

The deal grants the company an exclusive right to negotiate the purchase of up to an additional 41% of the equity interest in Operaciones Petroleras Soledad.

Operaciones Petroleras Soledad is the third-party contractor and operator of a hydrocarbons production contract awarded by Pemex Exploracion y Produccion, a subsidiary of Petroleos Mexicanos the Mexican national oil company, on the Soledad block located in the State of Veracruz in eastern Mexico.

The acquisition has been structured into two tranches. The first tranche involves the purchase of an initial 49% equity interest in Operaciones Petroleras Soledad. As consideration for the first tranche, the company will pay the vendor a fixed amount of US$2 million ($2.7 million) at closing; fund the capital commitments and, in certain cases, operational costs of Operaciones Petroleras Soledad for the next two years of the O&G Contract for US$15 million in year one and US$30 million in year two; and assume 49% of the abandonment obligations to be completed by the end of the O&G Contract in 2039, which are estimated at about US$10 million net to the company.

Under the agreements, effective May 1, the company is entitled to the economic interests, including its share of production and cash flows,from Operaciones Petroleras Soledad. The entitlement begins ahead of the closing of the first tranche. The closing of the first tranche is expected to occur by July 29 and is conditional upon the company funding the first US$15 million of the commitment.

Operaciones Petroleras Soledad will reimburse the commitment using cash flow from operations and the maximum capital exposure of New Stratus Energy ( RDRIF ) under the capex commitment is estimated at US$12.5 million.

New Stratus Energy ( RDRIF ) has nominated one director to the board of the Mexican company, has filled several of its technical and managerial positions. It will also nominate a member of Operaciones Petroleras Soledad in the operating committee of the O&G Contract.

The second tranche involves the purchase by the company of up to an additional 41% of the equity interest of Operaciones Petroleras Soledad under terms to be negotiated among the company and the vendor based on the results of operations on the field.

The company will have exclusivity, a right of first offer, and a first right of refusal for six months after completion of the two-year commitment, to negotiate the second tranche of the acquisition.

New Stratus shares were last seen up C$0.04 to C$0.64 on the TSX Venture Exchange.

Price: 0.64, Change: +0.04, Percent Change: +6.67