LONDON: ADM Energy PLC, a natural resource investing company, has formed a joint venture to acquire a portfolio of producing oil and gas wells and a natural gas gathering system in Oklahoma, the company announced Tuesday.
The joint venture, Vega Upstream JV LLC, was formed with Covenant Oil Group Corp. and has executed a purchase agreement to acquire the assets for a base purchase price of approximately $14.9 million. The transaction is expected to close on or before May 31, with an effective date of Feb. 1, 2026.
ADM will hold a 50% membership and voting interest in Vega Upstream JV and a 10% asset interest in the underlying Midcon Assets, as the portfolio is called. The company’s equity contribution is approximately $100,000.
The Midcon Assets include an average 49.4% working interest in 28 operated wells in Custer County, Oklahoma, and an average 3.9% working interest in 250 non-operated wells across multiple counties. The package also includes a natural gas gathering system transporting about 4.4 million cubic feet per day and 58 horizontal drilling locations.
Expected net revenue from existing production over the next 12 months is approximately $850,000.
“We believe the Midcon Acquisition will be transformative for the company,” said Executive Director Randall J. Connally, citing anticipated cash receipts and upside from three drilled but uncompleted wells and behind-pipe opportunities.
The acquisition is expected to be financed through an institutional credit facility of approximately $14 million and a $1 million equity contribution to the joint venture. ADM has the option to increase its economic interest in the joint venture to 35% before closing.
Vega Upstream JV has issued an option to Electric Guitar PLC to acquire a 50% interest in certain of the assets. The option expires July 31.
Covenant Oil Group Corp. is owned and controlled by Claudio Coltellini, a director of ADM. The company’s directors, excluding Coltellini, said after consulting with nominated adviser Cairn Financial Advisers LLP that the terms of the transaction are fair and reasonable for shareholders.
Editor’s Commentary: ADM Energy is putting $100,000 on the table for a shot at what looks like a pretty respectable cashflow stream — north of $70,000 per month in their base case scenario. That’s not nothing for a junior resource player.
But here’s where I get twitchy. The related-party aspect is impossible to ignore. Claudio Coltellini controls Covenant Oil Group, which is putting up $900,000 to ADM’s $100,000, yet they’re splitting governance 50-50. That’s a generous structure for ADM. The directors have signed off on it as “fair and reasonable,” which is the standard dance step in AIM-listed related-party disclosures. Still, minority shareholders would be right to keep both eyes open on how decisions actually get made.
The ELEG option adds an interesting layer — potential fees and warrants if Electric Guitar exercises. But that’s a future headline, not today’s money.
The third-party reserve report from Haas & Cobb, due before closing, is the real tell. That’s when we’ll see whether the $14.9 million price tag is justified or optimistic.
Bottom line: Promising structure, decent near-term cashflow potential, but the Coltellini connection means everyone should be watching governance like a hawk. This deal works if the assets perform and the JV operates at arm’s length. If either of those falters, the questions will come fast.