Avatar Energy Ltd. (TSX: V.AVG, Stock Forum) said that it has entered into a binding letter agreement to sell its working interest in properties located in the Pembina Strawberry Creek area to an arm's length third party for cash gross proceeds of $3.12 million.
The company's Pembina Strawberry Creek properties consist of 4.25 gross sections and 3.75 net sections of Cardium formation oil bearing acreage in the Pembina area of Alberta.
According to the Avatar Energy press release, the transaction will close in two tranches with the first tranche for $1,120,000 expected to close on Nov.30, 2012 and the second tranche for $2,000,000 expected to close on or before Feb.15, 2013.
The net proceeds from the transaction will be used to repay all indebtedness owing under Avatar's credit facility, satisfy other liabilities and for general corporate purposes.
On a post-Transaction basis, Avatar will continue to be listed on the TSXV and will focus on its Pembina Brazeau properties while exploring other opportunities in the Pembina Cardium light oil play that have long life high quality reserves with repeatable drilling upside.
Avatar is a junior oil and gas company focus on Alberta production.
On Friday, Avatar’s stock was up 300% and was trading at $0.06 a share. The company has a market cap of $1.3 million, based on 22.3 million shares outstanding. The 52-week high and low was $0.21 and $0.01 respectively.