Calima Energy has signed an agreement for the sale of its wholly owned subsidiary, Blackspur Oil, to Astara Energy for a total consideration of approximately C$75m ($56m).

The transaction includes the sale of Blackspur Oil's Brooks and Thorsby production assets in Alberta, Canada.

The sale is contingent upon shareholder and Canadian Competition Act approval, both of which are anticipated to be secured.

Calima’s board of directors has recommended the sale and anticipates the transaction will double its current market capitalisation.

Upon completion, Calima Energy intends to distribute at least 85% of the sale proceeds to its shareholders in a tax-efficient manner.

The remaining proceeds will be allocated towards funding future exploration programmes and covering ongoing operational and administrative expenses.

Calima Energy will continue as a listed entity, maintaining production from the Paradise well in British Columbia and exploring new complementary opportunities.

Calima chairman Glenn Whiddon said: “For some time, the share price of Calima has not accurately reflected the value of Calima’s oil and gas assets vis-à-vis our Canadian peers.

“The Blackspur Sale presents an excellent opportunity for Calima shareholders to benefit from this differential. It is the board's objective to return the maximum amount of these proceeds to shareholders.”

The Blackspur sale is expected to be completed within ten days after the general meeting, which is scheduled on 15 February 2024, and no later than 30 March 2024.

The Brooks assets owned by Calima comprise a core land position of more than 69,000 acres primarily targeting the Sunburst and Glauconitic formations.

Currently, the Thorsby asset has 14 wells producing more 1,100 barrels of oil equivalent per day.