By: Tomas Ronolski - AllPennyStocks.com News

Tuesday, June 3, 2014

It has been a rocky couple years for shareholders of Blacksteel Energy Inc. as the junior oil and gas company tries to get on track. Management and directors have come and gone and it looks like one is coming around again. Through it all, though, shares have held steady, rising from about 15 cents per share in June 2013 to a current level of 20 cents. Last August,, Curtis Hartzler kept his position as a director, but resigned from his position as President and CEO of Blacksteel Energy (TSX-Venture:BEY), replaced by Les Treitz. That set off a series of other director changes, including Greg McLean resigning ten days later. Craig Frew was appointed to the board in September and then resigned in March. In April, Hatzler left his role as a director.

Blacksteel’s primary asset is a 100-percent working interest in a four-section petroleum and natural gas lease in the Del Bonita Area of Southern Alberta, which the company believes may have Bakken potential. Blacksteel also has a 25-percent working interest in one section of land in the Crossfield area.

It looks like the company is about to try and kick up operations, saying on Tuesday that it has signed a letter of intent to acquire three companies in the energy space for a total of $8.49 million, including debt. Blacksteel will pay for the acquisitions through a combination of cash and stock. In conjunction with the acquisitions, Blacksteel is aiming to raise up to $15 million through a private placement. The company last raised funds through a private placement completed in August with gross proceeds of about $760,000.

The acquisition targets are focused on waste management, environmental services and geotechnical drilling in northeastern British Columbia and northwestern Alberta. Blacksteel has agreed to pay $3.85 million (14.25 million shares and $1 million in cash) for Alcan, a British Columbia company that provides waste water processing, disposal facilities and onsite water treatment. Alcan generated no revenue in the last 7-1/2 months and posted a net loss of $37,449.

Blacksteel is paying $1.18 million (3.5 million shares and $476,645 in cash) for Peace Drilling and Research Ltd. and $3.46 million (6.0 million shares and assumption of $2.26 million in secure debt) for Integrated Resource Technologies Ltd., an Alberta company. Peace Drilling generated revenue of $625,873 in the fiscal year ended March 31 and operated profitably, with net income of $69,116. Integrated generated $139,000 in revenue but would have lost $51,186 in the recent fiscal year, except for a line item only labeled “Net Other Income” of $100,495 that swung the company to profitability of $49,309.

With the acquisitions, the company will be changing its leadership team. Ken Watson, the sole shareholder of Integrated, will take the roles of CEO and director. Greg McLean comes back into the fold at VP Finance and CFO. McLean is also receiving an advisory fee of 300,000 shares of BEY at the completion of the transactions. Ron Baker, who controls Alcan and Peace Drilling along with Karen Baker, will serve as a director. Eugene Chen will hold the positions of corporate secretary and director and Chris Scase will be a director also.

Investors aren’t responding to the news of the LOI to grow the company. Maybe investors are waiting for a definitive agreement and customary approvals. Maybe the price tag is viewed as too high, considering the limited revenue and long-term debt. Maybe it’s the re-shuffling of management. Maybe it’s because the shares outstanding are jumping from 26.9 million to 51.0 million. Whatever it is, shares are flat at 20 cents as the day heads towards a close without any trading volume.

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