Canadian Overseas Petroleum Limited (CVE:XOP) (PINK:VELXF) stock price jumped up after the company was given a permission to form a joint venture with ExxonMobil Corporation.
XOP share price jumped up 18.9% on Wednesday under a trading volume of 2,7 million, which was significantly above the average of 402 thousand. The stock gaped above the previous resistances at 27 and 30 cents per share and has a very good background to postulate going further up. The next resistance should be around the 200 day moving average at 36 cents per share.
The stock became popular after Canadian Overseas announced that the National Oil Company of Liberia has accepted the terms of Exxon Mobile and Canadian Overseas joint venture proposal. The companies can now team up under arrangement in the production sharing contract related to block LB-13 offshore Liberia. Some details still require attention before the transaction can be completed.
Under the conditions established back in November 2011, Exxon will acquire the 70% interest immediately after Canadian Overseas buys the property from the current owner. The remaining 30% non-operating working interest will be left to Canadian Overseas.
Exxon will pay $55 million for their share and will also cover up to $36 million of XOP’s proportional cost share when drilling the first well. The approval of National Oil was necessary for this transaction to happen in the first place.
It will cost XOP $85 million to acquire a 100% interest in LB-13.
