Daybreak Oil and Gas, Inc. (OTCPK:DBRM) signed a conditional equity exchange agreement to acquire Reabold California, LLC from Gaelic Resources Limited for $5.3 million on October 20, 2021. As per the terms of the Equity Exchange Agreement, Reabold California will become a wholly-owned subsidiary of Daybreak, which, in exchange, will issue 160,964,489 Daybreak shares to Gaelic Resources Limited. The acquisition will be an all-stock transaction where Gaelic Resources Limited will own up to 45% of Daybreak's common stock at closing. As part of the transaction Daybreak will also be raising approximately $2.5 million through the sale of its common stock to fund development programs in both the Sacramento Basin properties as well as its San Joaquin Basin properties. If the Exchange Agreement has not been completed by the amended Long-Stop Date, Daybreak agrees to compensate Gaelic through the payment of a break fee, in the amount of $0.5 million to be paid in Daybreak common stock shares.

For the year ended December 31, 2020, Reabold reported total assets of $8,396,000; total stockholders' equity of -$493,000; revenue of $1.1 million; operating loss of $450,000; and net loss of $498,000.

As per the conditions of the Equity Exchange Agreement, prior to completion of the transaction, Daybreak is required to raise a minimum of $2.5 million via an equity raise; the proceeds of which will be used to grow production across Daybreak's enhanced portfolio. In addition, Daybreak will be required to complete a conversion of certain of its debt into equity. The transaction is also subject to regulatory approvals, amendment to Daybreak's articles of incorporation, Daybreak board and shareholder approvals, resignation of Reabold's directors, and the execution of indemnification and registration rights agreements. It is expected to close in the first quarter of 2022. As per the article on October 27, 2021, the Board of Directors of Daybreak has established that a Special Meeting of the Shareholders will be held on February 14, 2022 to consider and vote on the Equity Exchange. Pursuant to the Amendment, effective February 14, 2022, Daybreak and Gaelic agreed to amend the “Long-Stop Date” set forth in the Exchange Agreement from February 14, 2022 to April 29, 2022. As per the meeting held on May 20, 2022, the transaction was approved by the shareholders of Daybreak.

James Spinney, Rory Murphy and James Dance of Strand Hanson Limited acted as financial advisor to Gaelic Resources Limited.

Daybreak Oil and Gas, Inc. (OTCPK:DBRM) completed the acquisition of Reabold California, LLC from Gaelic Resources Limited on May 25, 2022. The transaction was completed following satisfaction of all conditions.