LONDON: Zenith Energy, the international energy production and development company, has signed exclusivity agreements to pursue the acquisition of a combined 82% stake in Daybreak Oil and Gas Inc., the company announced Tuesday.
The proposed acquisition aligns with Zenith’s strategy of maximizing value in Leopard Energy Inc., its U.S. publicly traded subsidiary in which Zenith holds about 99.87% of total voting rights. Any acquired shares would be held through Leopard Energy or another designated Zenith subsidiary, the company said.
Zenith entered into confidentiality and exclusivity agreements with Reabold Resources Plc and Portillion Capital Ltd., which hold approximately 42% and 40% of Daybreak’s issued share capital, respectively.
Under the 90-day exclusivity period, Zenith will conduct due diligence and negotiate the proposed transactions. During that time, Portillion and Reabold have agreed not to solicit or engage in competing discussions regarding their Daybreak interests.
The agreements are non-binding, and there is no certainty any transaction will be completed, Zenith said. Any acquisition remains subject to satisfactory due diligence, definitive transaction documentation and other agreed conditions.
Daybreak is an OTC-traded independent crude oil and natural gas company focused on onshore assets in California, including working interests in producing wells and development acreage in Kern County. In May 2022, Daybreak acquired Reabold California LLC, which holds producing and development assets in Contra Costa and Monterey counties.
Current production is estimated at approximately 130 barrels of oil per day, reflecting a prolonged period of limited drilling and development activity, based on management representations and preliminary due diligence.
Zenith noted that recent California legislative changes, including Senate Bill 237, may create a more supportive permitting framework for oil and gas development in Kern County.
The Reabold shareholding originated from Daybreak’s 2022 acquisition of Reabold California in a transaction valued at about $5.3 million. Portillion’s interest came from a $2.5 million equity financing tied to that acquisition.
“We are pleased to have secured exclusivity over both Reabold’s and Portillion’s shareholdings, which together represent an approximately 82% controlling interest in Daybreak,” said Andrea Cattaneo, chief executive officer of Zenith. “Daybreak represents an operated, revenue-generating onshore production base with established infrastructure, existing production and substantial development potential.”
Cattaneo added that the acquisition would support Leopard Energy’s growth objectives and represent a further step in building Leopard into a diversified, revenue-generating platform focused on onshore U.S. energy assets.
