TIDMZPHR
RNS Number : 6881Z
Zephyr Energy PLC
26 January 2022
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26 January 2022
Zephyr Energy plc
("Zephyr" or the "Company")
Equity fundraise of GBP12 million and US$28 million senior debt
facility to complete the acquisition of non-operated production
assets and associated CAPEX in the Williston Basin;
GBP1.2 million broker option to enable existing Shareholders to
participate in the equity fundraise;
2022 Paradox Basin high impact drilling programme planned;
Notice of General Meeting
Zephyr Energy plc (AIM: ZPHR) (OTCQB: ZPHRF), the Rocky Mountain
oil and gas company focused on responsible resource development
from carbon-neutral operations, is pleased to announce a placing
and subscription of, in aggregate, 240,000,000 new ordinary shares
of 0.1 pence ("p") each in the Company ("Placing Shares"), at a
price of 5p per Placing Share ("Issue Price"), to raise GBP12
million before expenses (together, the "Placing"). A Broker Option
to raise up to an additional GBP1.2 million for the Company has
been put in place to allow existing shareholders who are qualifying
investors to participate on the same terms as the Placing. Further
details of the Broker Option are set out below. Of the funds raised
in the Placing, approximately GBP8.675 million is conditional,
inter alia, on approval by the Company's Shareholders, further
details of which are set out below.
The net proceeds of the Placing, along with a senior debt
facility for US$28 million (together the "fundraise"), will be used
to complete the US$36 million acquisition of non-operated working
interests in currently producing wells in the Williston Basin,
North Dakota, U.S. (the "Assets") (the "Acquisition" or "the
Williston"), as well as to fund further near-term production growth
in the Williston. Expected cash flow from the Acquisition, in
addition to cash flow from Zephyr's current non-operated portfolio,
will be used to accelerate 2022 development in the Company's
flagship Paradox Basin project in Utah, U.S. ("Paradox
project").
Highlights
-- The Company is undertaking a conditional fundraise which
consists of a GBP12 million equity Placing, and has received an
approved commitment for a US$28 million senior debt facility from a
long-established North Dakota-based commercial bank.
-- The Board believes that the combined debt and equity proceeds
have the potential to deliver substantial near-term value and
growth for Shareholders.
-- Proceeds will be used for the following operational purposes:
o To fully fund the US$36 million Acquisition:
-- The Acquisition will add a net 2.764 million barrels of oil
equivalent ("mmboe") of Proven Reserves, and includes a growing
production stream of approximately 1,105 barrels of oil equivalent
per day ("boepd") net to the Assets in December 2021.
o To fund an estimated US$6 million in near-term drilling
capital expenditure ("CAPEX") which, along with anticipated
additional cash flow generated in the coming months, will
accelerate drilling and production growth across Zephyr's asset
portfolio.
o To equip the Company's State 16-2 well for production, and to
fund development of the surface infrastructure required to enable
the sale of gas via the nearby pipeline and/or to a potential
2-megawatt ("MW") cryptocurrency mining facility development to be
co-located on the well site.
-- Once the Acquisition has been completed, the Company plans to
hedge a significant portion of its non-operated production to take
advantage of the increased commodity prices since the date of the
original Acquisition announcement on 22 November 2021, in order to
ensure substantial internal funding capacity for its ambitious
growth plans.
-- The cashflows from the Company's post-Acquisition
non-operated portfolio have the potential to support significant
growth in the Company's existing portfolio and will enable an
accelerated drilling programme to be undertaken on the Company's
flagship Paradox Basin asset.
o Zephyr plans to drill three Paradox Basin wells in the second
half of 2022. In addition, in the event the 2022 Paradox drilling
programme meets expectations, the Company anticipates a
significantly larger Paradox drilling programme in 2023.
-- The Company has implemented a GBP1.2 million broker option
scheme to enable existing Shareholders to participate in the equity
fundraise on the same terms as the Placing.
Colin Harrington, Chief Executive of Zephyr, said : "The
fundraise announced today and the associated Acquisition are
further huge steps forward for the Company. After closing this
highly accretive acquisition, Zephyr will have nearly tripled its
existing non-operated production - and pro forma forecast cash flow
per fully-diluted share will have more than doubled through the
addition of this high-quality, high-margin production base with
significant near-term growth potential.
"Most importantly, the Acquisition's resultant cashflows have
the potential to power growth across our broader portfolio. Zephyr
plans to financially hedge a substantial portion of the combined
non-operated production in order to secure the funding required to
accelerate a high impact three-well drilling programme on our
operated flagship Paradox project in the second half of 2022 -
which in turn, with success, may lead to a significantly larger
Paradox drilling programme in 2023. The cash flows from the
non-operated portfolio will also allow for Zephyr to complete the
infrastructure investment needed to bring the successfully tested
State 16-2 well into full production in the coming months, and will
also fund further near-term drilling in the enlarged non-operated
Williston Basin portfolio.
"The fundraise and the completion of the Acquisition represent a
fantastic start for 2022, and we look forward to maintaining our
momentum and delivering on our key objective by unlocking
significant further upside value from the Paradox project. I would
like to thank Turner Pope Investments ("TPI") and the rest of our
adviser team for the successful execution of the Placing in very
challenging market conditions, and I would like to take this
opportunity to welcome our new Shareholders and institutional
investors on board. I am also delighted that we are able to attach
a broker option scheme to the Placing which will enable existing
Shareholders to participate on the same terms as the Placing.
"The Board looked a number of potential funding options for the
Acquisition and concluded that the debt and equity package
announced today was by far the optimal way forward, as it maximises
the Company's ability to fast-track the development of the Paradox
project. While the Board considered a number of proposals to fully
fund the Acquisition by debt, those proposals ultimately came at a
significantly higher cost and limited the amount of free cash that
would be available over the next twelve months to invest into the
Paradox project - and were therefore deemed less attractive
alternatives to today's announced funding.
"Over the coming months, we will be providing regular updates
for Shareholders as we progress through this transformational
period - and in the coming weeks, we expect to be able to announce
details of the independent Competent Persons Report ("CPR") being
prepared on the Paradox project.
"Finally, in line with our core beliefs and public commitment,
we intend to ensure that all net hydrocarbons produced from the
Acquisition will have a "net-zero" Scope 1 operational carbon
impact while under our ownership. This will be achieved largely
through our programme of purchasing Verified Emission Reduction
credits to mitigate all Scope 1 carbon emissions. As always, we
will strive to operate as responsible stewards of our investors'
capital and of the environment in which we work."
Background to the Placing and the Acquisition and details of
General Meeting
Details of the Acquisition were announced by the Company on 22
November 2021, with an update announcement made on 20 December
2021. The Directors of Zephyr (the "Directors" or the "Board")
believe that the Acquisition will be an ideal addition to Zephyr's
existing asset portfolio and that the cashflows generated from the
Assets will enable the Company to proceed with, amongst other
things, the fast-track development of its Paradox project.
The Placing has been supported by a range of new and existing
institutional investors, family offices and other investors, and
was conducted by TPI acting as sole broker for the Company.
Of the funds raised in the Placing, approximately GBP8.675
million is conditional, inter alia, on the approval by the
Company's Shareholders of resolutions to provide authority to the
Directors to issue and allot further ordinary shares of 0.1p each
("Ordinary Shares") on a non-pre-emptive basis, which will be
sought at a General Meeting to be held on 10 February 2022, further
details of which are set out below.
The Company is also launching the Broker Option to enable
existing shareholders to participate on the same terms as the
Placing. The Broker Option will potentially enable the Company to
raise up to an additional GBP1.20 million through the issue of new
ordinary shares at the Issue Price. The Broker Option will be open
for 24 hours following the release of this announcement and details
on how to participate in the scheme are outlined below.
Acquisition overview
On 22 November 2021, the Company announced to the market that it
had entered into binding terms for the Acquisition. The Acquisition
has an effective date of 1 December 2021 (the "Effective
Date").
Under the terms the Acquisition, Zephyr is acquiring working
interests in 163 currently producing wells (the "PDP wells") with
net production of approximately 1,105 barrels of oil equivalent per
day ("boepd") in December 2021.
-- In addition to the PDP wells, the Acquisition includes:
o 18 proved not producing ("PNP") and drilled but uncompleted
("DUC") wells, all of which have been drilled and are expected to
come online in 2022; and
o o 47 proved but undeveloped ("PUD") locations for future
drilling demonstrating the long-term potential growth of the
Assets.
-- The Assets are spread across 22 separate drilling pads in
Mountrail County, North Dakota and are estimated, by the
independent reserve consulting firm Sproule Incorporated
("Sproule"), to hold a net 2.764 million barrels of oil equivalent
("mmboe") of Proven Reserves.
-- The Acquisition has robust economics which, along with
Zephyr's existing Williston Basin production, is expected to
generate substantial low risk cashflow which can be redeployed into
the Company's growing Paradox Basin development. The Company
estimates:
-- The Acquisition cost equates to 2.1x the Assets' 2022
forecasted earnings before interest, tax, depreciation and
amortisation ("EBITDA")
-- Low operating expense of approximately US$13.91 per barrel of
oil equivalent ("boe") which provides high cash margins of over
75%, as forecasted over the next three years
-- When combined with Zephyr's current Williston Basin assets,
the Company's pro forma non-operated portfolio is expected to
generate approximately US$24 million of EBITDA in 2022 as forecast
by the Board
-- When combined with Zephyr's current Williston Basin assets,
the Company's pro forma non-operated portfolio is expected to
generate production of approximately 2,250 boepd in Q1 2022
reducing to approximately 1,250 boepd in Q4 2022 based on Sproule's
forecasts. Production is expected to rise again in Q1 2023 as
further DUCs are brought online.
-- The Board estimates the post-tax net present value of the
Acquisition is US$46.3 million, using Sproule's pricing (outlined
in Appendix A) at a ten per cent discount rate ("NPV-10")
-- Cashflows generated by the PDP wells acquired are expected to
utilise the Company's historical tax losses of more than US$16
million
Note: Estimates using Sproule pricing as shown in Appendix A to
this announcement
The key details of the Acquisition are as follows:
-- Acquisition of 1,960 net acres of non-operated working interests in Williston Basin
-- Purchase price of US$36 million, subject to various customary closing adjustments
o US$4 million in non-refundable deposits has been paid to
date
o Closing adjustments will include US$3.8 million payable in
respect of the balance of CAPEX due and will be further adjusted
for the net income generated since the Effective Date
-- The working interests across the Assets average approximately 4%
-- The wells are operated by Whiting Petroleum ("Whiting"), an
active and highly experienced operator in the Williston Basin,
which currently serves as the operator of a number of Zephyr's
existing non-operated wells
The key benefits of the Acquisition are as follows:
-- A diversified, low-decline production base with established history and stable cash flows
-- Near term growth from DUC wells currently being brought online
-- Potential to hedge a significant portion of the existing
production at attractive prices to lock in returns and provide
downside protection
-- Excellent complement to (and funding source for) the less
mature, higher upside Paradox Basin development
The economics on the Acquisition are extremely attractive. Once
the DUC wells are online, the Company estimates that the
Acquisition will provide:
-- Up to US$13.8 million of undiscounted free cash flow after
CAPEX, net to Zephyr, in 2022 to deploy into the Paradox
development or into additional projects, and over the life of the
project, a total US$73.6 million of undiscounted cash flow
-- 2P net present value at a ten per cent discount rate (" NPV-10"): US$46.3 million
-- Well-level operating expenses forecast to average
approximately US$13.91 per boe produced over the next three
years
-- Acquisition price of 2.1x forecast 2022 EBITDA
Note: Estimates using Sproule pricing as shown in Appendix A to
this announcement
Completion of the Acquisition
Once the Placing has been completed, and funds received (which,
in relation to approximately GBP8.675 million of the Placing
proceeds, remains subject to the requisite resolutions (the
"Resolutions") being passed by shareholders of the Company at a
general meeting ("GM") (details of which are set out below)), the
Company will draw down on the senior debt facility and complete the
Acquisition.
It is anticipated that, subject to, inter alia, the Resolutions
being passed, the Acquisition will complete on or before 18
February 2022.
Details of the US$28 million senior debt facility
The Company has received credit committee approval from a North
Dakota based commercial bank for a US$28 million senior debt
facility, consisting of a fully amortising US$18 million term loan
for a period of 48 months ("Term Loan") and a $10 million revolving
credit facility ("RCF"). Principal and interest payments are to be
made monthly on the Term Loan and monthly interest payments are
payable on the RCF.
Other key terms of the Term Loan and the RCF are as follows:
-- Fixed interest rate of 6.74%
-- First lien mortgage, assignment of production, security
agreement and financing covering all current and future mineral
interests
-- Unlimited full recourse corporate guarantee from Zephyr
Paradox project update
It is anticipated that cashflows generated by the Acquisition
will be deployed into the Paradox project and the Company intends
to commence a high impact three-well drilling programme in the
second half of 2022 to further delineate the scale of the project.
This will include:
-- one delineation/development well targeting the Cane Creek
reservoir in Zephyr's 25,000-acre White Sands Unit ("WSU");
-- one exploration well targeting the WSU's shallow Paradox formation; and
-- one delineation/development well in the historically prolific
Cane Creek Field (new acreage south of the WSU)
150 additional drill target locations across nine reservoir
targets have been identified to date, with significant additional
scope and scale to be unlocked in the next three years upon
delineation and exploration success. The Board estimates a
potential 1 billion boe of hydrocarbon in place across its acreage
position, with recoverable rates of between 5% and 15% based on
current assumptions and mitigation of risk factors, and Zephyr will
consider joint venture and strategic partnerships for further
expedited development of the project.
An estimated US$10.0 million of funds raised from the Placing
will be used to fund near-term CAPEX across Zephyr's asset
portfolio and, along with cash flow generated, will also accelerate
infrastructure construction on the Paradox project.
Following the recent successful production testing at the State
16-2 well, the Company will now commence with work to equip the
well for production, with initial liquid volumes sold to Utah-based
refineries and initial gas volumes potentially sold to a co-located
cryptocurrency mining facility development. While Zephyr will
consider providing a small portion of seed funding for any
co-located cryptocurrency mining development, it is currently
envisaged that the potential cryptocurrency mining facility and any
future such development projects would likely be spun out into a
new entity for the benefit of Zephyr's shareholders, thereby
limiting Zephyr's exposure to CAPEX associated with such a
development.
Further infrastructure buildout at the State 16-2 well is
expected to facilitate additional gas sales via a nearby pipeline.
Work for a pipeline tie-in is expected to commence in the second
half of 2022 for sales in 2023.
Zephyr has commissioned the independent reserve consulting firm
Sproule to complete a CPR to assess the Company's reserves across
both the Cane Creek reservoir and eight high-graded overlying
reservoirs. The CPR is expected to be published in coming weeks
once Sproule has completed their review.
Details of the Placing
In total, 240,000,000 Placing Shares are proposed to be allotted
and issued pursuant to the Placing, at an Issue Price of 5p per
Placing Share to raise gross proceeds of GBP12 million. The Placing
Shares, excluding in relation to the subscription as detailed
below, have been conditionally placed by TPI acting as agent and
broker of the Company, with certain new and existing institutional
and other investors pursuant to a Placing Agreement, as detailed
below. Placing Shares have also been subscribed for directly with
the Company ("Subscription Shares") by subscribers pursuant to a
subscription agreement.
The Company currently has limited shareholder authority to issue
new Ordinary Shares for cash on a non-pre-emptive basis.
Accordingly, the Placing is being conducted in two tranches as set
out below:
1. First placing shares
A total of approximately GBP3.325 million, representing the
issue of 66,500,000 Placing Shares at the Issue Price (the "First
Placing Shares"), has been raised within the Company's existing
share allotment authorities which were granted at the Company's
annual general meeting held on 30 June 2021 (the "First Placing").
Application has been made for the First Placing Shares to be
admitted to trading on AIM and it is expected that their admission
to AIM will take place on or around 1 February 2022 ("First
Admission"). The issue of the First Placing Shares is conditional,
inter alia, on First Admission and the Placing Agreement becoming
unconditional in respect of the First Placing Shares and not being
terminated in accordance with its terms prior to First Admission.
The issue of the First Placing Shares is not conditional on the
Second Placing completing.
2. Second placing shares
The balance of the Placing, being approximately GBP8.675 million
and representing the issue of 173,500,000 Placing Shares at the
Issue Price (the "Second Placing"), is conditional upon, inter
alia, the passing of resolutions to be put to shareholders of the
Company at a general meeting of the Company to be held on 10
February 2022 to provide authority to the Directors to issue and
allot further new Ordinary Shares for cash on a non-pre-emptive
basis, whereby such authority will be utilised by the Directors to
enable completion of the Second Placing (amongst other things, as
detailed below). A circular containing a notice of the GM will be
posted to shareholders shortly.
Conditional on the passing of the resolutions at the GM,
application will be made for the Second Placing Shares to be
admitted to trading on AIM and it is expected that their admission
to AIM will take place on or around 11 February 2022 ("Second
Admission").
In addition to the passing of the resolutions at the GM, the
Second Placing is conditional, inter alia, on Second Admission and
the Placing Agreement becoming unconditional in respect of the
Second Placing Shares and not being terminated in accordance with
its terms prior to Second Admission. The First Placing is not
conditional on the Second Placing completing.
If the necessary resolutions are approved at the GM, the Placing
would result in the allotment and issue of an aggregate of
240,000,000 new Ordinary Shares, representing approximately 16 per
cent. of the Company's issued ordinary share capital as enlarged by
the Placing.
The Placing Shares and the Broker Option shares (as defined
below) will, when issued, be credited as fully paid and will rank
pari passu in all respects with the existing Ordinary Shares of the
Company, including the right to receive all dividends or other
distributions made, paid or declared in respect of such shares
after the date of issue of the relevant Placing Shares.
Broker Option
The Company has also granted an option to TPI under the Placing
Agreement in order to deal with additional demand under the Placing
in the event that requests to participate in the Placing from
existing shareholders who are qualifying investors are received
during the period of 24 hours following the release of this
announcement (the "Broker Option"). To participate in the Broker
Option, qualifying investors should communicate their interest to
TPI via their independent financial adviser, stockbroker or other
firm authorised by the Financial Conduct Authority (all of whom
will be required to confirm to TPI that their client is an existing
shareholder), as TPI cannot take direct orders from individual
private investors. TPI should be contacted by telephone on ( 020)
3657 0050 or by email at info@turnerpope.com . The broker Option is
conditional on the Resolutions being passed at the GM.
TPI may choose not to accept bids and/or to accept bids, either
in whole or in part, on the basis of allocations determined at
their discretion (after consultation with the Company) and may
scale down any bids for this purpose on such basis as TPI may
determine. A separate announcement will be made regarding the
results of the Broker Option.
Any Ordinary Shares issued pursuant to the exercise of the
Broker Option ("Broker Option Shares") will be issued on the same
terms and conditions as the Placing Shares. The Broker Option may
be exercised by TPI, following consultation with the Company, but
there is no obligation on them to exercise the Broker Option or to
seek to procure subscribers for Broker Option Shares pursuant to
the Broker Option. The maximum number of Broker Option Shares that
may be issued pursuant to the exercise of the Broker Option is
24,000,000. The maximum aggregate number of new Ordinary Shares
(including both the Placing Shares and Broker Option Shares) that
may be issued is 264,000,000.
The Broker Option Shares are not being made available to the
public, only to existing Shareholders, and none of the Broker
Option Shares are being offered or sold in any jurisdiction where
it would be unlawful to do so. No Prospectus will be issued in
connection with the Broker Option.
If the Broker Option is exercised, settlement for the Broker
Option Shares and admission of the Broker Option Shares to trading
on AIM is expected to take place on Second Admission. Assuming the
Broker Option is fully subscribed, the Placing and Broker Option
combined would result in the issue, in aggregate, of 264,000,000
new Ordinary Shares, representing approximately 17 per cent. of the
Company's issued ordinary share capital as enlarged by the Placing
and Broker Option.
Warrants
The Company will issue investors in the Placing and the Broker
Option with one warrant for every four Placing Shares or Broker
Option Shares subscribed, meaning that a total of up to 66,000,000
warrants will be issued to subscribe for 66,000,000 new Ordinary
Shares ("Investor Warrants"), assuming the Broker Option is taken
up in full. The Investor Warrants will be exercisable at a price of
7. 5 pence per Ordinary Share for a period of three years from the
date of issue.
The Company is proposing to issue TPI with up to 17,600,000
warrants to subscribe for 17,600,000 new Ordinary Shares ("Broker
Warrants"), subject to full subscription under the Broker Option.
The Broker Warrants are exercisable at a price of 7. 5 pence per
Ordinary share for a period of three years from the date of the GM.
TPI shall also receive commission on the exercise of the Investor
Warrants and additional warrants equivalent to ten per cent. of the
aggregate value of Investor Warrants exercised, such figure to be
divided by the exercise price of 11.25 pence ("Additional Broker
Warrants"). Up to 4,400,000 Additional Broker Warrants to subscribe
for 4,400,000 new Ordinary Shares will be granted, assuming the
Broker Option is taken up in full and that all Investor Warrants
are validly exercised. The Additional Broker Warrants will be
issued in tranches and will be exercisable at a price of 11.25
pence per Ordinary share for a period of three years from the date
of issue.
The issue of the Investor Warrants, the Broker Warrants and the
Additional Broker Warrants is conditional on the passing of the
resolutions to be put to shareholders of the Company at the GM to
provide authority to the Directors to issue and allot further new
ordinary shares on a non-pre-emptive basis. None of the warrants
will be admitted to trading on AIM or any other stock exchange.
Placing Agreement
Under the terms of a Placing Agreement between the Company and
TPI, TPI will receive a corporate finance fee from the Company,
commission relating to the Placing Shares and Broker Option Shares
conditional on First Admission and Second Admission and commission
in respect of the exercise of Investor Warrants. The Company will
give customary warranties and undertakings to TPI in relation,
inter alia, to its business and the performance of its duties. In
addition, the Company has agreed to indemnify TPI in relation to
certain liabilities that they may incur in undertaking the Placing.
TPI has the right to terminate the Placing Agreement in certain
circumstances prior to First Admission and Second Admission, in
particular, in the event that there has been, inter alia, a
material breach of any of the warranties. No part of the Placing is
being underwritten.
Total voting rights
Following First Admission, the Company's total issued share
capital will consist of 1,371,246,001 Ordinary Shares, with one
voting right per share. The Company does not hold any shares in
treasury. Therefore, the total number of Ordinary Shares and voting
rights in the Company will be 1,371,246,001 from First Admission.
This figure may be used by shareholders in the Company as the
denominator for the calculations by which they will determine if
they are required to notify their interest in, or a change in their
interest in, the share capital of the Company pursuant to the FCA's
Disclosure Guidance and Transparency Rules.
Placing - General Meeting requirement
Of the funds raised in the Placing, approximately GBP 8.675
million is conditional, inter alia, on the approval by the
Company's Shareholders of resolutions to provide authority to the
Directors to issue and allot further new ordinary shares on a
non-pre-emptive basis at a general meeting to be convened by the
Company, further details of which are set out below.
Notice of General Meeting
The Company will publish a Circular to convene the GM to propose
Resolutions to enable completion of the Placing, the issue of the
Broker Option Shares and the grant of the Investor Warrants, the
Broker Warrants and the Additional Broker Warrants.
The general meeting will be held at 10.00 a.m. on 10 February
2022. The circular containing the notice of general meeting will be
published and sent to shareholders today and will be available
shortly thereafter on the Company's website, www.zephyrplc.com.
Shareholders are strongly urged to vote by proxy in accordance with
the instructions set out in the notice of general meeting.
Contacts:
Zephyr Energy plc Tel: +44 (0)20 7225
Colin Harrington (CEO) 4590
Chris Eadie (CFO)
Allenby Capital Limited - AIM Nominated Tel: +44 (0)20 3328
Adviser 5656
Jeremy Porter / Liz Kirchner
Turner Pope Investments - Broker Tel: +44 (0)20 3657
James Pope / Andy Thacker 0050
Flagstaff Strategic and Investor Communications
Tim Thompson / Mark Edwards / Fergus Tel: +44 (0) 20 7129
Mellon 1474
Dr Gregor Maxwell, BSc Hons. Geology and Petroleum Geology, PhD,
Technical Adviser to the Board of Zephyr Energy plc, who meets the
criteria of a qualified person under the AIM Note for Mining and
Oil & Gas Companies - June 2009, has reviewed and approved the
technical information contained within this announcement.
Estimates of resources and reserves contained within this
announcement have been prepared according to the standards of the
Society of Petroleum Engineers. All estimates, unless otherwise
noted, are internally generated and subject to third party review
and verification.
Glossary of Terms
1P: proven reserves (both proved developed reserves + proved
undeveloped reserves)
2P: 1P (proven reserves) + probable reserves, hence "proved and
probable"
3P: the sum of 2P (proven reserves + probable reserves) +
possible reserves, all 3Ps "proven and probable and possible"
Reserves: Reserves are defined as those quantities of petroleum
which are anticipated to be commercially recovered from known
accumulations from a given date forward
Appendix A
Sproule Proven Reserves Summary
Reserves Well Net Oil Net Gas Net NGL Discounted
Category Count Reserves Reserves Reserves Cash
(Mbbl) (MMcf) (Mbbl) Flow
10%(M$)
PDP 179(1) 1,097 1,823 281 30,458
PNP 5 48 71 11 1,213
DUC/PUD(1) 13 325 372 57 7,504
PUD 47 415 473 73 7,173
Total 244 1,885 2,739 423 46,349
*Note: Some columns may not add due to rounding
1. PDP well count includes 163 PDP wells and 16 After Payout
(APO) wells. The APO are classified as proved developed producing,
but do not convert to a paying interest. Only the abandonment costs
have been included for these wells.
2. Drilled Uncompleted (DUC) wells have been classified as
proved undeveloped (PUD) and are drilled wells with a range of
remaining capital costs required to complete and bring on
production. These have all been classified
as PUD at the request of the Company, for simplicity
Sproule Price Deck
Year Oil ($/bbl) Oil Differential Oil Realized($/bbl) Gas($/mmbtu) NGL
($/bbl) ($/bbl)
2021 76.00 -6.50 69.50 5.00 30.40
2022 71.00 -6.50 64.50 4.00 28.40
2023 68.00 -6.50 61.50 3.50 27.20
2024 66.00 -6.50 59.50 3.25 26.40
1. Prices escalated at 2% per year after 2024 until price
doubles, then held flat
2. Oil differential is the difference in price between an
established benchmark and what is actually received at the lease or
field (inclusive of adjustments for quality, energy, content,
transportation fees and regional / local differentials)
Notice to Distributors
Solely for the purposes of the temporary product intervention
rules made under sections S137D and 138M of the FSMA and the FCA
Product Intervention and Product Governance Sourcebook (together,
the "Product Governance Requirements"), and disclaiming all and any
liability, whether arising in tort, contract or otherwise, which
any "manufacturer" (for the purposes of the Product Governance
Requirements) may otherwise have with respect thereto, the Placing
Shares have been subject to a product approval process, which has
determined that the Placing Shares are: (i) compatible with an end
target market of retail investors and investors who meet the
criteria of professional clients and eligible counterparties, as
defined under the FCA Conduct of Business Sourcebook COBS 3 Client
categorisation, and are eligible for distribution through all
distribution channels as are permitted by the FCA Product
Intervention and Product Governance Sourcebook (the "Target Market
Assessment").
Notwithstanding the Target Market Assessment, distributors
should note that: the price of the Placing Shares may decline and
investors could lose all or part of their investment; the Placing
offer no guaranteed income and no capital protection; and an
investment in the Placing is compatible only with investors who do
not need a guaranteed income or capital protection, who (either
alone or in conjunction with an appropriate financial or other
adviser) are capable of evaluating the merits and risks of such an
investment and who have sufficient resources to be able to bear any
losses that may result therefrom. The Target Market Assessment is
without prejudice to the requirements of any contractual, legal or
regulatory selling restrictions in relation to the Placing.
Furthermore, it is noted that, notwithstanding the Target Market
Assessment, Allenby Capital Limited will only procure investors who
meet the criteria of professional clients and eligible
counterparties. For the avoidance of doubt, the Target Market
Assessment does not constitute: (a) an assessment of suitability or
appropriateness for the purposes of the FCA Conduct of Business
Sourcebook COBS 9A and 10A respectively; or (b) a recommendation to
any investor or group of investors to invest in, or purchase, or
take any other action whatsoever with respect to the Placing
Shares.
Each distributor is responsible for undertaking its own target
market assessment in respect of the Placing Shares and determining
appropriate distribution channels.
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END
IOEFIFITLSIRFIF
(END) Dow Jones Newswires
January 26, 2022 03:06 ET (08:06 GMT)
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