Iona Energy Inc. (CVE:INA) (PINK:IONAF) stock price extended upwards after the company announced intentions to acquire an undeveloped oil field in the North Sea.
INA stock price added 13% when it extended the preceding rally. The associated trading volume was 4.6 million, more than eight times heavier than the daily average of 552 thousand.
On Friday, February 3, the company announced to have signed a binding agreement to acquire 58.73% interest in Block 13/21a from Centrica Venture Production Company. The block contains the West Wich oil field and is located offshore in the North Sea.
The deal will be concluded through a British subsidiary of Iona and the total cost for this purchase should be around $8.2 million. The deal remains subject to regulatory approval by the U.K. Department of Energy and Climate Change.
Another part of the property will be owned by Idemitsu Petroleum UK Ltd. The field has not been developed since it was discovered in 1990.
The recent stock price rally is justifiable and is very likely to extend further. The current market cap of INA reaches only $73.25 million, which is only slightly above their net book value of $67.25 million. The company is also in position to pay the $8 million without requiring additional cash infusion, which is very good for the existing shareholders as there will be no dilution or increase in debt.
