Vancouver-headquartered Ivanhoe Energy Inc. (TSX:IE) has acquired the rights to develop oil and gas in a 16,800-square-kilometre area in Mongolia.
Sunwing Energy Ltd., an Ivanhoe Energy subsidiary, acquired PanAsian Petroleum, a private company headquartered in Alberta in an all-share deal worth approximately $7.2 million.
Ivanhoe Energy issued 2.7 million shares to acquire PanAsian and rolled over any existing PanAsian stock-purchase warrants into 735,449 Ivanhoe Energy purchase warrants.
Ivanhoe Energy acquired PanAsian's key asset, a production sharing contract with the Petroleum Authority of Mongolia, a state agency.
The contract provided the exclusive right to explore, develop and produce oil and gas within block XVI in Mongolia's Nyalga Basin, an area covering 16,839 square kilometers, located approximately 100 kilometres southeast of Mongolia's capital city Ulaanbaatar.
The structure of the merger is such that PanAsian will continue to operate on its own and hold the production sharing contract with the Mongolian government. Ivanhoe Energy plans to keep all existing PanAsian staff in Mongolia and Canada.
Ivanhoe Energy's share price range during the past week: between $2.65 and $2.81; 52-week high: $3.05; 52-week low: $0.39.