StockMarketWire.com - Oil and gas producer and explorer Columbus Energy said Friday it had signed an agreement to acquire Steeldrum Oil Company, and released an operational update for the second quarter.

Columbus acquired several assets in the transaction including a 100% operated interest in Innis-Trinity field, 100% operated interest in South Erin field, and 83% operated interest in the Cory Moruga development project.

The acquisition is expected to add current oil production of approximately 200-250 bopd and reserves of 5.6m barrels, and recoverable reserves of approximately 1.1m barrels to the Columbus portfolio.

Steeldrum's assets are all located in southern Trinidad and close to Columbus's existing assets, allowing the company to utilise existing technical expertise and relationships.

The acquisition would also allow Columbus first priority use of two rigs at market rates, one of which would be suitable for the company's planned exploration activities in the South West Peninsula.

Columbus funded the initial outlay for the acquisition by issuing 92,743,775 shares, equivalent to 12.5% of the current issued share capital and £4.4m at the latest closing mid-market price. The transaction is expected to be completed in Q4 2018.

The company also provided an operational update for the second quarter: Trinidad reached a peak production during the quarter of 648 bopd with a steady 530 to 575 bopd delivered month on month.

The cash balance was US$2.4m at the end of Q2 2018 after $1.11m of capex investment, abandonment fund contributions, M&A and Spain legacy costs.

The company said production at Goudron was weighed down by sand production issues which it was actively seeking to address through new artificial lift applications. 'We would hope to see gross production across all of our fields grow continually throughout 2H 2018 and continue to grow well beyond that,' said Leo Koot, Executive Chairman of Columbus. Story provided by StockMarketWire.com