Adding up to a big week for the Calgary-based oil and gas producer, Canadian Superior Energy Inc. in separate announcements last week said it is expanding its Western Canadian footprint through acquisition and has made a new natural gas discovery offshore Trinidad.

The company said it is growing its Western Canadian oil and natural gas production through an agreement to acquire its privately owned neighbor, Seeker Petroleum Ltd., for approximately C$51.8 million, including the assumption of approximately C$8.5 million of net debt. Under the terms of the deal, Canadian Superior will offer C85 cents cash for each Seeker common share or 0.2285 Canadian Superior common shares (priced at C$3.72/share) for each Seeker common share, subject to a maximum cash component of C$14.21 million and maximum share component of 7.7 million Canadian Superior shares.

"Canadian Superior's strategy is to grow our international business, as evidenced by our natural gas discovery offshore Trinidad earlier this week, and to grow our Western Canadian production base internally through the 'drill bit' and by acquisitions," said Canadian Superior CEO Craig McKenzie. "This transaction is consistent with our strategy and is also accretive to our bottom line. Seeker is a very good geographical fit with our current production and offers excellent additional drilling potential for both oil and gas."

Canadian Superior will acquire approximately 1,035 boe/d (72.5% natural gas, 27.5% oil and liquids), approximately 2,073 MMboe of proven plus probable reserves with approximately 1,297 MMboe of additional possible reserves, 57,060 net acres (101,255 gross acres) of undeveloped land and 102 sq. km of proprietary 3-D seismic. In addition to the 1,035 boe/d current production, Seeker has approximately an additional 240 boe/d (67% light oil) that is anticipated to be on-stream early February. Canadian Superior said the transaction will increase its Western Canadian production base by 31% to more than 4,350 boe/d. The company will have more than 160,000 acres of undeveloped land (68% average working interest) in Western Canada.

"Canadian Superior offers our shareholders the opportunity to merge into a well capitalized public company with listings on both the TSX and AMEX," said Seeker CEO Leif Snethun. "In addition, our shareholders will continue to have exposure to the Seeker assets while being able to participate in a larger production base and Canadian Superior's high-impact international projects." Seeker's major operating areas in Alberta include Puskwaskau, Kaybob/Windfall, Mulligan and Red Earth, and in British Columbia, Cabin/Petitot and Parkland.

The boards of directors of both Canadian Superior and Seeker have unanimously approved the transaction. The transaction contains a mutual noncompletion fee in the amount of C$2 million, which is payable by Seeker or Canadian Superior to the other, as the case may be, in certain circumstances if the transaction is not completed. The transaction requires the approval of Seeker shareholders along with customary regulatory, court and other approvals.

Earlier in the week, Canadian Superior and its partners BG International Ltd. and Challenger Energy Inc., reported a new natural gas discovery about 60 miles off Trinidad. The discovery was made at the partners' Victory well, which is located about 100 kilometers off the eastern shore of Trinidad. The well is part of an initial three-well exploration program in Intrepid Block 5(c), according to Canadian Superior Chairman Greg Noval. The producers, he said, "are encouraged by the initial test results in the first zone and will be moving up hole in the well to test at least one further horizon."

According to McKenzie, the partners completed an extended flow testing of the first zone to be tested in the well, which "measured flow rates averaging between 40 and 45 MMcf/d. The well also tested high-gravity condensate of approximately 30 barrels per MMcf of gas produced."

The flowing wellhead pressure on a restricted basis and the bottomhole pressures "are comparable or better than other producing wells and fields in the immediate area," McKenzie said.

"This is a discovery of gas -- that's it," BG Group spokesman Neil Burrows told The Globe and Mail newspaper in Toronto. "There's more evaluation work needed." Burrows did not speculate about the potential reserves, and he said "commercial viability" still has to be established. "Obviously, it's early days -- but as with all discoveries, it's good news."

The producers plan to further analyze the initial test results, "and we will now focus on the next stage of the testing program by moving up hole to complete at least one more zone in the well before moving the rig to our next prospect on Block 5(c) and spudding the Bounty well," McKenzie said. "This information will allow Canadian Superior and the other participants in the well to move forward with detailed reserve analysis of the discovered resource."

Canadian Superior is paying 26.66% of the block's exploration costs to maintain a 45% working interest, BG International is paying 40% of the costs to maintain a 30% working interest, and Challenger is paying 33.33% of the costs for a 25% working interest.

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