Zenith Energy (LSE:ZEN) has entered confidentiality and exclusivity agreements to pursue the potential acquisition of approximately 82% of Daybreak Oil and Gas, an onshore crude oil and natural gas company operating in California.
The proposed transaction would see Zenith acquire 42% from Reabold Resources and 40% from Portillion Capital Limited.
Zenith, the listed international energy production and development company, said a deal would be part of its strategy to build a larger portfolio of revenue-generating US energy assets.
Exclusivity agreements give Zenith a 90-day period to conduct customary due diligence and negotiate definitive documentation.
Daybreak has working interests and producing wells in Kern County, along with assets in Contra Costa and Monterey Counties. According to Zenith, the current estimates indicate production of around 130 barrels of oil per day.
"Daybreak represents an operated, revenue-generating onshore production base with established infrastructure, existing production and substantial development potential, and we believe there is scope to increase production, enhance cash flow and create value," Andrea Cattaneo, Chief Executive Officer, said.
Zenith notes Daybreak's asset base has seen drilling and development activity and states recent California legislative changes, including Senate Bill 237, may create a more supportive permitting framework for operations in Kern County.
