Santa Maria Energy officials have called off a planned million-dollar merger with a New York-based acquisition corporation, and will instead try to privately raise funds to kick-start a long-awaited North County oil development project.
The union with Hyde Park Acquisition Corp. II was terminated earlier this month after the corporation failed to convince enough of its shareholders to back the idea by May 1, said Beth Marino, Santa Maria Energy’s vice president of legal and corporate affairs.
Santa Maria Energy ended the merger the following day, moving on to a Plan B that involves raising the necessary $100 million to $125 million in private capital.
The merger was supposed to be completed by the end of June, combining all assets under the parent company, Santa Maria Energy Corp.
Fusing forces was projected to raise at least $40 million to push forward the oil project, which will install a total of 136 production oil wells, connecting pipelines and other oil equipment on leased private property south of Orcutt.
The 110-well expansion is still expected to take shape over the next two years — after officials obtain permits and necessary equipment — and funds should also be in place by the end of 2015, Marino said.
“We terminated the merger agreement because they didn’t meet the conditions,” she said. “Since the execution of the merger agreement, we recognized that the conditions of the merge agreement might not be met. We anticipate a couple months delay, but not significant.
“We are poised to begin the process of seeking alternate financing options for our Orcutt diatomite project.”
The proposed merger was announced last December, just weeks after the Santa Barbara County Board of Supervisors approved the project, albeit with stricter carbon-gas emissions requirements than had been green-lighted previously.
Santa Maria Energy estimated a capital budget of $114.3 million for the oil project in 2014, subject to expected adjustments, according to merger details outlined in a document filed with the Securities and Exchange Commission.
The document detailed the oil company’s current operations as relatively small, using a cyclic steam injection process to heat oil in a well to a temperature that produces flow.
Santa Maria Energy already extracts oil from 75 wells drilled into Monterey shale and 26 wells drilled into a diatomite layer at its Orcutt field.
Officials identified 7,753 potential drilling locations on its properties in Orcutt, northwest Casmalia and the Santa Maria Valley, according to the filing.
Marino said Kayne Investors, which made an initial $50 million investment in Santa Maria Energy in 2008, is fully committed to remaining a partner in the deal as reconstituted.