PanWestern Energy Inc and Industrial Air Corp, a privately held Alberta corporation with helium exploration permits, have signed of intent to merge through a stock swap valued at $5.4m.

It is intended that PanWestern, an oil and gas exploration and exploitation corporation with land and production assets in Alberta, Canada, will acquire all of Industrial Air's stock in exchange for 12 million PanWestern shares at a deemed price of 45 cents each.

PanWestern currently has about 8.5 million shares outstanding, although the deal anticipates that an additional 5.5 million to 11.1 million shares will be issued through a concurrent issue of equity. As a result, Industrial Air's shareholders would own a significant minority stake in the recapitalised company.

Industrial Air Corporation is a privately held corporation with primary assets consisting of a number of helium and associated gas exploration permits and leases, which cover a known hydrocarbon producing land area in close proximity to the city of Swift Current, Saskatchewan.

The proposed deal will evaluate the potential for significant inert gas deposits as well as conventional petroleum and natural gas reserves.