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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d)
of
the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): December 29, 2023
Trio
Petroleum Corp.
(Exact
name of registrant as specified in its charter)
| Delaware |
|
001-41643 |
|
87-1968201 |
(State
or other Jurisdiction
of
Incorporation) |
|
(Commission
File
Number) |
|
(IRS
Employer
Identification
No.) |
4115
Blackhawk Plaza Circle, Suite 100
Danville,
CA 94506
(661)
324-3911
(Address
and telephone number, including area code, of registrant’s principal executive offices)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under
any of the following provisions:
| ☐ |
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| |
|
| ☐ |
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| |
|
| ☐ |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| |
|
| ☐ |
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities
registered pursuant to Section 12(b) of the Act: None.
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
growth company ☒
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Item
1.01 Entry into a Material Definitive Agreement.
Leasehold
Acquisition and Development Option Agreement and Asset Acquisition
On
November 10, 2023, Trio Petroleum Corp (the “Company”) entered into a Leasehold Acquisition and Development Option
Agreement (the “Asphalt Ridge Option Agreement”) with Heavy Sweet Oil LLC (“Heavy Sweet”). Pursuant
to the Asphalt Ridge Option Agreement, the Company acquired an option to purchase up to a 20% production share in certain leases in a
long-developed oil and gas area of eastern Utah, southwest of Vernal, Utah, totaling 960 acres. Heavy Sweet holds the right to such leases
below 500 ft depth from surface (the “Asphalt Ridge Leases”) and the Company acquired the option to participate in
Heavy Sweet’s initial 960 acre drilling and production program on such Asphalt Ridge Leases (the “Asphalt Ridge Option”).
The
Asphalt Ridge Option has a term of nine months, through August 10, 2024. Pursuant to the Asphalt Ridge Option, the Company has the exclusive
right, but not the obligation, to acquire up to a 20% interest in the Asphalt Ridge Leases for $2,000,000 (the “Purchase Price”),
which may be invested in tranches, provided that the initial tranche closing occurs during the Asphalt Ridge Option period and subsequent
tranches occurring as soon thereafter as practical within the Asphalt Ridge Option period, with each tranche providing the Company a
portion of the ownership of the Asphalt Ridge Leases equal to 20% multiplied by a fraction, the numerator of which is the total consideration
paid by the Company, and denominator of which is $2,000,000. Upon receipt of any funding from the Company pursuant to the Asphalt Ridge
Option, Heavy Sweet is required to pay that amount to the named operator of the properties, to pay for engineering, procurement, operations,
sales, and logistics activities on the properties. The Asphalt Ridge Option Agreement provides that additional development capital is
expected to be secured by Heavy Sweet, and made available for the Company’s participation, by way of a reserve base lending facility
(RBL), provided that if such RBL cannot be obtained or does not cover all subsequent capital costs, Heavy Sweet agreed to fund a maximum
of $5,000,000 of the first funding required for the development program, with the parties splitting any costs thereafter according to
their ownership interests. The initial target is three wells, with an estimated cost of $5,000,000 for roads, pads, drilling, and above
ground steam and storage facilities, and thereafter the parties anticipate working together to fund further well development based on
their proportionate ownership thereof.
On
or around the date the parties entered into the Asphalt Ridge Option Agreement, Heavy Sweet entered into a Leasehold Acquisition and
Development Option Agreement with Lafayette Energy Corp (“LEC”), of which Michael Peterson, the Chief Executive Officer
and director of the Company, is also the Chief Executive Officer and director, and Frank C. Ingriselli, the Company’s Vice Chairman,
is also a director (the “LEC Option”). The LEC Option has similar terms as the Asphalt Ridge Option Agreement, except
that it allows LEC to obtain a 30% interest in the Asphalt Ridge Leases and requires LEC to pay certain equity compensation to Heavy
Sweet.
The
Company and Heavy Sweet further agreed that, to the extent LEC does not fully exercise the LEC Option, the Company has the right to acquire
up to all 30% of the rights set forth in the LEC Option (or such lesser amount which LEC has not exercised), from Heavy Sweet, for $3,000,000
cash.
The
exercise of the Asphalt Ridge Option is contingent, unless waived by LEC, upon the following: (a) Heavy Sweet providing the Company the
statements of revenues and direct operating expenses for the prior two years for the asset and the unaudited stub period for 2023, through
the date of closing; (b) satisfactory due diligence review by the Company of Heavy Sweet, the leases, the property and other information;
(c) the negotiating of a mutually-acceptable joint operations agreement (“JOA”) or other development and operations
agreement(s) as agreed by the parties; and (d) Heavy Sweet providing the Company an updated independent reserves report including proved
undeveloped reserves (PUDs) and an estimate of gross valuation and discounted net present values, and indicating best estimate original
oil-in-place (OOIP) volumes and gross (100%) contingent oil resources, as of a date no earlier than August 31, 2023, for discoveries
located in Northwest Asphalt Ridge, Uinta Basin, Utah.
On
December 29, 2023, the Company and Heavy Sweet entered into an Amendment to Leasehold Acquisition and Development Agreement (the
“Amendment”), pursuant to which the Company and Heavy Sweet amended the Asphalt Ridge Option Agreement to provide
that, within three (3) business days of the effective date of the Amendment, the Company would fund $200,000 of the $2,000,000 total
Purchase Price in advance of Heavy Sweet satisfying the closing conditions set forth in the Asphalt Ridge Option Agreement, in exchange
for the Company receiving an immediate 2% interest in the Asphalt Ridge Leases, which advanced funds would be used solely for the building
of roads and related infrastructure in furtherance of the development plan.
On
December 29, 2023, the Company paid the $200,000 advance of the total $2,000,000 Purchase Price to Heavy Sweet as required pursuant to
the Amendment, and Heavy Sweet immediately assigned a 2% interest in the Asphalt Ridge Leases to the Company.
The
foregoing descriptions of the Asphalt Ridge Option Agreement and the Amendment are not complete and are subject to and qualified in their
entirety by reference to the full text of each such document, which are filed as Exhibits hereto and incorporated herein by reference.
Item
7.01 Regulation FD Disclosure.
On
January 5, 2024, the Company issued a press release announcing the Asphalt Ridge Option Agreement and the Amendment. A copy of the press
release is attached as Exhibit 99.1 to this Current Report on Form 8-K.
The
information furnished in this Item 7.01, including Exhibit 99.1 attached hereto, shall not be deemed “filed” for purposes
of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities
of that section, nor shall it be deemed incorporated by reference into any filing or other document pursuant to the Securities Act of
1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing or document, except as shall be
expressly set forth by specific reference in such a filing or document.
Item
9.01 Financial Statements and Exhibits.
(d)
Exhibits.
The
following exhibits are being filed or furnished, as applicable, with this Current Report on Form 8-K:
*
Filed or furnished, as applicable, herewith.
The
inclusion of any website address in this Form 8-K, and any exhibit thereto, is intended to be an inactive textual reference only and
not an active hyperlink. The information contained in, or that can be accessed through, such website is not part of or incorporated into
this Form 8-K.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
| |
Trio
Petroleum Corp. |
| |
|
|
| Date:
January 5, 2024 |
By: |
/s/
Michael L. Peterson |
| |
Name:
|
Michael
L. Peterson |
| |
Title: |
Chief
Executive Officer |
Exhibit
10.1
LEASEHOLD
ACQUISITION AND DEVELOPMENT OPTION AGREEMENT
STATE:
Utah
| OPTIONOR:
|
Heavy
Sweet Oil LLC (“HSO”) |
| |
1090
Center Dr |
| |
Park
City, UT 84098 |
| OPTIONEE:
|
Trio
Petroleum Corp. (“TPET”) |
| |
5401
Business Park, Suite 115 |
| |
Bakersfield,
CA 93309 |
EFFECTIVE
DATE: November 10, 2023
WHEREAS,
HSO holds certain tar sands production leases in the State of Utah described in Exhibit A (the “Leases”) on
certain properties described in Exhibit A (the “Property”), and is offering a 20% of 100% production share
(“Proportionate Production Share”) to TPET in the Leases and HSO’s initial 960 acre drilling and production
program, per the Asphalt Ridge Development Plan attached hereto as Exhibit B (the “Development Plan”), and
additional rights as set forth herein;
WHEREAS,
Optionor desires to grant Optionee, named above, the option (the “Option”) to acquire a Proportionate Production Share
interest in the Leases, and certain additional leases, and participate in the development of the same, as set forth herein; and
WHEREAS,
Optionor and the Optionee may each be referred herein as a “Party,” and together the “Parties”
to Leasehold Acquisition and Development Option Agreement (this “Agreement”).
NOW,
THEREFORE, in consideration for the covenants, and agreements made by the Parties hereto, the Parties hereby agree as follows:
1.
Option and Operations.
a.
Option Period and Purchase Price. Optionor grants Optionee, for a term of nine (9) months from the Effective Date (the
“Option Period”), the exclusive right, but not the obligation, to acquire a Proportionate Production Share interest
in the Leases in exchange for consideration valued at $2,000,000 (the “Purchase Price”), which may be invested in
tranches by Optionee, payable to Optionor for the purposes of executing the Development Plan and acquisition of interests in the Leases
by Optionee. The initial tranche closing shall be an amount no less than $500,000 funding within 7 days of satisfying the required items
in paragraph 2 below (the “Initial Closing”). If the Option is exercised by Optionee during the Option Period, additional
closings (each, a “Closing”) may occur as soon as practical thereafter within the Option Period. At each Closing the
Parties will enter into a mutually-agreeable form of assignment to transfer the Lease interests from Optionor to Optionee purchased at
such Closing. As each Closing is consummated with consideration paid by Optionee to Optionor, Optionee shall earn a percentage of ownership
of the Leases calculated as follows, subject to a maximum 20% interest in the Leases and $2,000,000 total Purchase Price paid in all
Closings:
For
example, if Optionee pays $1,000,000 of the Purchase Price at the Initial Closing, then it will receive a 10% interest in the Leases
(($1,000,000 / $2,000,000) *20%)). Optionor shall apply 100% of the Purchase Price paid by Optionee to performance of engineering, procurement,
operations, sales and logistics in accordance with the Development Plan through its partner, Valkor Oil & Gas LLC, as the named operator.
b.
Operations and Reporting. The operator shall be Valkor Oil & Gas LLC. All production and operating reports will be
copied upon receipt by Optionor to Optionee. In order to fulfill Optionee’s audit requirements, the books and records of Optionor
will be open and available to Optionee upon request.
c.
Hedging, Etc. Optionee reserves the right to sell, encumber, hedge or otherwise dispose of its Proportionate Production
Share at its discretion.
d.
Capital Calls and Funding. All additional development capital is expected to be secured through a Reserve Base Lending
facility (the “RBL”) secured by Optionor and will be made available for Optionee’s participation in its sole
discretion. If the RBL does not cover all subsequent capital costs, Optionor will fund the project as required to complete the first
three phase one wells through-the-tanks and maintain operations as necessary up to a maximum $5,000,000, and then each of Optionee and
Optionor will fund operations and development proportionately according to their ownership interests thereafter. All net proceeds disbursed
to Optionor under the RBL shall be used solely to fund direct and indirect costs and expenses for drilling and related exploration and
development expenses on the Property. The initial target is 3 wells as set forth in the Development Plan. Thereafter, the Parties will
work together to fund further well development.
e.
Right of First Refusal. The Parties agree and acknowledge, and HSO represents, that HSO has entered into a Leasehold Acquisition
and Development Option Agreement (the “LEC Option”) with similar terms and conditions with Lafayette Energy Corp (“LEC”),
pursuant to which HSO has granted an option (the “LEC Option”) to LEC to acquire up to a 30% of 100% production share
(the “LEC Proportionate Share”) to LEC on substantially the same terms and conditions as set forth herein, with the
exception that LEC must issue to HSO shares of restricted common stock of LEC as additional consideration at the Initial Closing (the
“LEC Initial Closing Shares”). The Parties hereto agree that, to the extent LEC does not fully exercise the LEC Option,
TPET shall have the exclusive right, in its sole discretion, to acquire some or all of the LEC Proportionate Share from HSO for cash
on the same terms and conditions as set forth in this Agreement with respect to TPET’s acquisition of the Proportionate Share,
i.e., up to $3,000,000 cash for the full 30% LEC Proportionate Share, proportionately reduced in the event TPET elects not to purchase
the full LEC Proportionate Share from HSO. To the extent TPET elects to acquire some or all of the LEC Proportionate Share from HSO,
(i) TPET’s Proportionate Share as defined hereunder shall be correspondingly increased by the LEC Proportionate Share acquired
by TPET, and (ii) TPET’s Expansion Option (as defined below) shall be correspondingly increased to reflect TPET’s increased
Proportionate Share.
f.
Expansion Option. Subject to conventional, industry standard force majeure circumstances (including but not limited to
acts of God, lack of materials and/or drilling equipment, etc.) , upon the earlier of a) successful drilling and completion of fifty
(50) or more wells that are put on production under this Agreement; or b) two years from the date of execution of this Agreement, Optionee
shall have the right, but not the obligation, to expand its position in the leasehold area under this Agreement by acquiring its Proportionate
Production Share of leasehold rights from Optionor in the Property covering up to an additional 1,920 Acres held under SITLA Lease ML
53805 (which lease, if an interest in acquired therein by Optionee, shall become a “Lease” hereunder). If Optionee elects
to exercise this expansion option (the “Expansion Option”), Optionee shall notify Optionor in writing (email acceptable)
and deliver to Optionor as consideration for the acquisition the amount of $2,000 per net acre ($3,840,000 for 1,920 acres) for a 20%
working interest to be acquired by Optionee, with consideration payable in the form of either (i) cash or (ii) stock or warrants at the
Company’s discretion (the “Expansion Option Warrants”), and which shall bear registration rights as agreed by
the Parties. The Expansion Option may only be exercised by Optionee for a two (2) year period commencing on the date of the Initial Closing.
Optionor grants to Optionee the right of first refusal to participate in any additional leasehold development along the Asphalt Ridge
play on terms offered to third parties.
g.
Total Royalty Burden. Optionor represents that the Utah State Institutional Trust Lands (SITLA) bituminous sand mineral
leases ML 53832, ML 53831 and 53805 each have total royalty burdens of no greater than 8% of 100%.
2.
Due Diligence and Documentation. The Initial Closing shall be contingent upon the following:
a.
Optionor will provide to Optionee the statements of revenues and direct operating expenses for the prior 2 years for the asset (12/31/21)
and (12/31/22) and the unaudited stub period for 2023 (or 2023 audit, depending on the closing date), through the date of Closing.
b.
Satisfactory due diligence review by Optionee of Optionor, the Leases, the Property and other information. Optionor shall provide all
documentation reasonably requested by Optionee, its advisors, its auditors, and the U.S. Securities and Exchange Commission.
c.
The Parties shall begin to negotiate a mutually-acceptable joint operations agreement (“JOA”) or other development
and operations agreement(s) as agreed by the Parties.
d.
Optionor shall provide to Optionee an updated independent reserves report prepared by Netherland, Sewell & Associates, Inc. (“NSAI”)
including PUDs and an estimate of gross valuation and discounted net present values, and indicating best estimate original oil-in-place
(OOIP) volumes and gross (100%) contingent oil resources, as of a date no earlier than August 31, 2023, for discoveries located in Northwest
Asphalt Ridge, Uinta Basin, Utah, and Optionor shall obtain NSAI’s written consent to include such report in Optionee’s public
filings with the U.S. Securities and Exchange Commission. Upon delivery of the updated reserve report in satisfaction of this Section
2(d), the report shall be attached hereto as Exhibit C.
3.
Notices. Any notice, request, demand or consent required or permitted to be given hereunder shall be in writing and delivered
in person, by prepaid overnight-delivery service or by email, addressed to the Party for whom intended at the following addresses:
| |
Optionee:
|
Optionor: |
| |
|
|
| |
Trio
Petroleum Corp. |
Heavy
Sweet Oil LLC |
| |
5401
Business Park, Suite 115 |
1090
Center Dr |
| |
Bakersfield,
CA 93309 |
Park
City, UT 84098 |
| |
Attn:
Stanford Eschner |
Attn:
Steven Byle |
| |
Email:
eschner@triopetroleum.com |
Email:
steven.byle@heavysweetoil.com |
or
at such other address as any of the above shall specify by notice to others.
Receipt
of a writing delivered in person or by pre-paid overnight delivery service shall be deemed received at the time such writing is actually
received at the proper address. Receipt of a writing delivered by email shall be deemed received when the intended recipient acknowledges
receipt via email.
4.
Successors and Assigns. No Party shall assign this Agreement or any part hereof without the prior written consent of the other Party.
Any such assignment in violation of this Agreement shall be void ab initio. Subject to the foregoing, this Agreement shall extend to
and be binding on Optionor and its heirs, successors and/or assigns.
5.
Governing Law. This Agreement shall be governed and construed in accordance with and pursuant to the laws of the State of Utah and
without regard to choice of law principles; provided, however, that no law, theory or public policy shall be given effect which would
undermine, diminish, or reduce the effectiveness of the waiver of damages provided in the next section herein below, it being the express
intent, understanding, and agreement of the Parties that such waiver is to be given the fullest effect, notwithstanding the negligence
(whether sole, joint or concurrent), gross negligence, willful misconduct, strict liability or other legal fault of a Party. For any
dispute that may arise with respect to this Agreement, including its effectiveness or validity, or under this Agreement, including any
claim of breach of this Agreement, the Parties hereby irrevocably submit to the jurisdiction of any state or federal court located in
Salt Lake County, Utah. EACH OF THE PARTIES HEREBY VOLUNTARILY AND IRREVOCABLY WAIVES TRIAL BY JURY IN ANY LITIGATION, ACTION OR OTHER
PROCEEDING BROUGHT IN CONNECTION WITH THIS AGREEMENT.
6.
Each Party Responsible for its Own Costs. Each of the parties shall bear all costs and expenses (including the fees and disbursements
of legal counsel, brokers, financial and tax advisers, consultants and accountants) incurred in connection with this Agreement. Neither
Party shall be liable in an action initiated by one against the other for special, indirect or consequential damages resulting from or
arising out of this Agreement, including, without limitation, loss of profit or business interruptions, however same may be caused.
7.
Entire Agreement. This Agreement, together with the exhibits which incorporated herein and made a part of this Agreement, constitutes
the entire agreement between the parties and supersedes all prior agreements, understandings, negotiations and discussions relating to
the subject matter thereof, whether oral or written. This Agreement may only be amended, supplemented or otherwise modified by written
agreement between the Parties.
8.
Preparation of Agreement. Each Party participated in the preparation of this Agreement. In the event of any ambiguity in this
Agreement, no presumption shall arise based on the identity of the draftsman of this Agreement or any part thereof.
9.
Own Reliance. Neither of the parties has relied or is relying on any other information, discussion or understanding in entering into
and completing the transactions contemplated in this Agreement.
10.
Separate Signatures. This Agreement may be signed separately by the Parties and accepted together as if all of the signatures were
on the same copy. Each Party warrants to the other Party that its signor of this Agreement has the authority to bind their respective
corporate entities to the same. Any .pdf or other electronic transmission of signatures to this Agreement shall, for all purposes, be
deemed originals.
11.
Publicity. All press releases, public announcements, or other publication (each a “Publication”) of any nature
whatsoever made by a Party relating to the existence of this Agreement, the content hereof or the transactions contemplated hereby, and
the method of release for publication thereof, shall be subject to the prior written consent of the other Party which shall not be unreasonable
withheld or delayed; provided, however, the Party wishing to make the Publication shall indemnify, defend, and hold the non-publishing
Party harmless from and claims, demands, causes of action, damages and losses (including reasonable attorney’s fees and costs of
defense) brought by any third party resulting from such Publication. Notwithstanding the foregoing, a Party may make such disclosures
relating to the existence of this Agreement, the content hereof or the transactions contemplated hereby in regulatory or other filings
as required by applicable law or regulation, as recommended or advised by legal counsel and/or auditors, and/or as requested or required
by regulatory agencies, including, but not limited to, disclosure by the Optionee of the same in its filings with the U.S. Securities
and Exchange Commission.
12.
No Waivers. No waiver of any of the provisions of this Agreement shall be deemed to constitute a waiver of any other provision (whether
or not similar), nor shall such waiver constitute a waiver or continuing waiver unless otherwise expressly provided in writing duly executed
by the party to be bound thereby.
13.
Severability. If any provision of this Agreement is determined by a court of competent jurisdiction to be illegal, invalid or unenforceable,
that provision shall be severed from this Agreement and the remaining provisions shall continue in full force and effect, without amendment.
[Signature
Page Follows]
This
Leasehold Acquisition and Development Option Agreement is executed by the Parties this _______day of November, 2023, but shall be deemed
effective for all purposes as of the Effective Date stated above.
| OPTIONOR:
|
|
OPTIONEE: |
| |
|
|
|
|
| Name:
|
Heavy
Sweet Oil LLC |
|
Name:
|
Trio
Petroleum Corp. |
| |
|
|
|
|
| By:
|
/s/
Steven Byle |
|
By:
|
/s/
Standford Eschner |
| Name:
|
Steven
Byle |
|
Name:
|
Stanford
Eschner |
| Title:
|
CEO
and Managing Member |
|
Title:
|
Chairman |
| |
|
|
|
|
| Address:
|
1090
Center Dr, Studio 31 Park City, UT 84098 |
|
Address:
|
5401
Business Park, Suite 115 Bakersfield, CA 93309 |
| |
|
|
|
|
| Email: |
steven.byle@heavysweetoil.com |
|
Email:
|
eschner@triopetroleum.com |
| Exhibit
“A”: |
Leases
and Property |
| Exhibit
“B”: |
Development
Plan |
| Exhibit
“C”: |
Reserve
Report |
Exhibit
A
Leases
Utah
State Institutional Trust Lands (SITLA) bituminous sand mineral leases ML 53832, ML 53831 and 53805 along with associated assignment,
Northwest Asphalt Ridge, Uinta Basin, Utah.
Property
The
Property is in T4S R20, and covers the western half of Section 23 (320 acres) and Section 22 (640 acres) for a total of 960 acres, and
are all covered under SITLA leases ML 53832 and ML 53831, held by TMC Capital with a register sublease to HSO for all rights below 500
ft depth from surface.
Exhibit
B
Development
Plan
Exhibit
C
Reserve
Report
Exhibit
10.2
AMENDMENT
TO LEASEHOLD ACQUISITION AND DEVELOPMENT AGREEMENT
This
AMENDMENT TO LEASESHOLD ACQUISITION AND DEVELOPMENT AGREEMENT (the “Amendment”), dated as of December 29, 2023
(the “Effective Date”) is by and between HEAVY SWEET OIL LLC (“HSO”) and TRIO PETROLEUM CORP (“TPET”
and together with HSO, the “Parties”), and amends that certain Leasehold Acquisition and Development Agreement entered
into by and between the Parties, dated as of November 10, 2023 (the “Option Agreement”). Capitalized terms used but
not otherwise defined in this Amendment have the respective meanings ascribed to them in the Option Agreement.
RECITALS
WHEREAS,
the Parties wish to amend Section 1.a. of the Option Agreement to provide that, within three (3) business days of the Effective Date
of this Amendment, TPET shall fund $200,000 of the $500,000 of the $2,000,000 total Purchase Price payable by TPET to HSO at the Initial
Closing (the “Advance Funds”), in advance of HSO satisfying the required items in paragraph 2 of the Option Agreement,
in exchange for a 2% interest in the Leases, which Advance Funds shall be used by HSO solely for the building or roads and related infrastructure
in furtherance of the development of the Leases.
NOW,
THEREFORE, in consideration of the covenants and agreements contained in this Amendment, and for other good and valuable consideration,
the receipt and sufficiency of which are acknowledged by the execution hereof, the Parties agree as follows:
| |
1.
|
The
Recitals set forth above are true and correct, and shall constitute a part of this Amendment. |
| |
2.
|
Upon
the Effective Date of this Amendment, Section 1.a. of the Option Agreement is amended to provide that, within three (3) business
days of the Effective Date of this Amendment, TPET shall fund $200,000 of the $500,000 of the $2,000,000 total Purchase Price
payable by TPET to HSO at the Initial Closing (the “Advance Funds”), in advance of HSO satisfying the required
items in paragraph 2 of the Option Agreement, in exchange for a 2% interest in the Leases, which Advance Funds shall be used by HSO
solely for the building or roads and related infrastructure in furtherance of the development of the Leases. Upon the payment of the
Advance Funds to HSO by TPET, (i) HSO shall immediately assign a 2% interest in the Leases to TPET in accordance with the terms of
the Option Agreement, as amended, and (ii) TPET shall only owe to HSO an amount of no less than $300,000 within 7 days of
satisfaction of the required items in paragraph 2 of the Option Agreement. |
| |
3.
|
Except
as expressly agreed upon in this Amendment, nothing contained in this Amendment will be deemed or construed to amend, supplement,
or modify the Option Agreement or otherwise affect the rights and obligations of any party thereto, all of which remain in full force
and effect in accordance with the Option Agreement and this Amendment. |
| |
4.
|
Except
as expressly modified in this Amendment, the Option Agreement is confirmed and will continue to be and remain in full force and effect
in accordance with its terms. Any existing or future reference to the Option Agreement and any document or instrument delivered in
connection with the Option Agreement will be deemed to be a reference to the Option Agreement as modified by this Amendment. |
| |
5.
|
This
Amendment may be executed in counterparts, each of which, when taken together, will constitute but one and the same instrument. |
| |
6.
|
This
Amendment will be governed by the laws of the State of Utah, without regard to the choice of law principles thereof. |
[Signature
Page to Follow]
IN
WITNESS WHEREOF, the Parties have caused their respective duly authorized representatives to execute this Amendment as of the Effective
Date.
| HEAVY
SWEET OIL LLC |
|
| |
|
|
| By:
|
/s/
Steven Byle |
|
| Name:
|
Steven
Byle |
|
| Title:
|
CEO
and Managing Member |
|
| |
|
|
| TRIO
PETROLEUM CORP |
|
| |
|
|
| By:
|
/s/
Michael L. Peterson |
|
| Name:
|
Michael
L. Peterson |
|
| Title:
|
CEO
& Director |
|
Exhibit
99.1
Trio
Petroleum Corp Announces an Option to Acquire a 20% Interest in the Asphalt Ridge Development Project in Utah
Estimated
Contingent Resources of 42-92 Million Barrels of Oil
Development
of this Potential Giant Oilfield Commencing January 2024
Bakersfield,
CA, Jan. 5, 2024 — Trio Petroleum Corp (NYSE American: TPET) (“Trio” or the “Company”), a California-based
oil and gas company, today announced that it has secured an option (the “Option”) to acquire a 20% interest in a sweet (i.e.,
low sulfur content), heavy-oil development project at Asphalt Ridge, located near the town of Vernal in Uinta County in northeastern
Utah. Development of Asphalt Ridge is planned to commence in Q1 2024 by a third party operator using advanced cyclic-steam production
techniques. The project is estimated by an independent reserve engineering firm to be one of the largest heavy oil deposits in North
America outside of Canada, making it a potential giant oilfield, and is unique given its low wax and negligible sulfur content, which
is expected to make the oil produced very desirable for many industries, including shipping.
Asphalt
Ridge is a prominent, northwest-southeast trending topographic feature (i.e., a dipping slope called a hog’s back or cuesta) that
crops-out along the northeast flank of the Uinta Basin. The outcrop is comprised largely of Tertiary and Cretaceous age sandstones that
are locally highly-saturated with heavy oil and/or tar. The oil-saturated sandstones extend into the shallow subsurface of the Uinta
Basin to the southwest, which is the site of the Asphalt Ridge Development Project, and where the sandstones are estimated in various
independent studies to contain billions of barrels of oil-in-place. The project leasehold comprises over 30,000 acres and trends northwest-southeast,
along the trend of Asphalt Ridge, over a distance of about 20 miles.
The
area has been underdeveloped for decades due, in large part, to lease ownership issues and the definition of heavy oil falling under
mining regulations in the State of Utah. These factors created conflict between surface rights and subsurface mineral rights and were
obstacles to developing the asset using proven advanced cyclic-steam production techniques. Years of work and millions of dollars have
been invested by third party developers to acquire State leases and even change laws in order to obtain the ability to develop this vast
oil field, with necessary permits now secured that will allow drilling to commence by our operating partner. Officials in the State of
Utah are very supportive, giving incentives to move forward including requiring only an 8% State royalty.
Two
development phases are currently envisioned. Phase 1 contemplates the development of 240 acres with an estimated 119 wells in the Northwest
Asphalt Ridge Area. Phase 2 contemplates the development of approximately 30,000 acres with potentially thousands of new wells, extending
about 20 miles along the trend to the southeast. The Company has entered into the Option to acquire up to 20% working interest in Phase
1 with the payment of $2,000,000 (i.e. 1% working interest for each $100,000 option exercised) as well as an option to acquire a 20%
working interest in Phase 2. On December 29, 2023, the Company funded the first $200,000 payment.
Phase
1 is commencing this month (January, 2024) by a third party operator, with upgrades to existing roads and well pads, with the drilling
of the first of three initial wells also planned to commence as early as this month. One of the initial goals is to produce the required
amount of oil requested by interested parties to analyze and test the oil to confirm suitability for potential high value off-take agreements.
With the completion of the three initial wells, the operator believes it will be able to execute reserve based lending agreements in
order to fund all future development of Phase 1, although there is no guarantee that the operators will be able to secure such reserve
based funding on acceptable terms and conditions.
The
plan is to develop Phase 1 using advanced cyclic-steam production techniques, including initial CO2 injection and, subsequently, to similarly
expand development across the 240 acres by drilling seventeen 7-spot hexagonal well patterns on 2 ½ acre spacing (a 7-spot has
a central steam/CO2 injection well that is surrounded by six producing oil wells).
Two
oil-saturated Cretaceous sandstones are planned to be developed in Phase 1: the Rimrock Sandstone and the underlying Asphalt Ridge Sandstone.
An internationally regarded reserve auditing firm (the “Reserve Auditor”), in a November, 2023 report issued to the operator,
for the Northwest Asphalt Ridge Area (i.e., Phase 1), estimated gross (100%) contingent resources in these two sandstones to range from
a low estimate (1C) of about 42 million barrels of oil (BO) to a high estimate (3C) of about 92 million BO, with the Best Estimate (2C)
being about 66 million BO. The Reserve Auditor estimated the 2C net contingent cash flow, discounted at 10%, at about $1 billion US dollars.
The
operator of the project will be Heavy Sweet Oil LLC through contracts with Valkor Group, an oil & gas process EPC company with years
of experience in designing and deploying systems for the processes and civil engineering for environmental, oil and gas projects including
heavy oil, carbon sequestration, and developing systems for maximum efficiency and environmental sensitivity.
Trio’s
CEO, Michael L Peterson, stated: “We are extremely excited to be participants in the effort to develop the giant, world-famous
and world-class Asphalt Ridge heavy-oil and tar accumulation into a highly profitable oilfield. It is excellent to be able to diversify
our exciting portfolio of California opportunities with such a high-potential asset in Utah, especially one that will not require a lot
of additional capital expenditures according to the operator’s development plan. Development is commencing now and, with success,
the Utah asset may be cash flowing in mid-2024. We now have two major assets in our portfolio, the South Salinas Project in California
and the Asphalt Ridge Project in Utah. We are diligently seeking to execute on our business plan to build cash-flow, ensure the success
of the Company, and to increase shareholder value.”
About
Trio Petroleum Corp
Trio
Petroleum Corp is an oil and gas exploration and development company headquartered in Bakersfield, California, with operations in Monterey
County, California, and Uinta County, Utah. Trio has a large, approximately 9,267-acre asset called the “South Salinas Project”
in Monterey County, California, where it owns an 85.75% working interest, an approximate 22% working interest in the McCool Ranch Oil
Field in Monterey County, and an option to acquire a 20% working interest in the approximately 30,000 acre Asphalt Ridge project in Uinta
County, Utah.
Cautionary
Statement Regarding Forward-Looking Statements
All
statements in this press release of Trio Petroleum Corp (“Trio”) and its representatives and partners that are not based
on historical fact are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of
1995 and the provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended (the “Acts”). In particular, when used in the preceding discussion, the words “estimates,” “believes,”
“hopes,” “expects,” “intends,” “on-track”, “plans,” “anticipates,”
or “may,” and similar conditional expressions are intended to identify forward-looking statements within the meaning of the
Acts and are subject to the safe harbor created by the Acts. Any statements made in this news release other than those of historical
fact, about an action, event or development, are forward-looking statements. While management has based any forward-looking statements
contained herein on its current expectations, the information on which such expectations were based may change. These forward-looking
statements rely on a number of assumptions concerning future events and are subject to a number of risks, uncertainties, and other factors,
many of which are outside of the Trio’s control, that could cause actual results to materially and adversely differ from such statements.
Such risks, uncertainties, and other factors include, but are not necessarily limited to, those set forth in the Risk Factors section
of the Trio’s S-1 filed with the Securities and Exchange Commission (SEC). Copies are of such documents are available on the SEC’s
website, www.sec.gov. Trio undertakes no obligation to update these statements for revisions or changes after the date of this
release, except as required by law.
Investor
Relations Contact:
Redwood Empire Financial Communications
Michael Bayes
(404) 809 4172
michael@redwoodefc.com
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