Crest Petroleum Corp. Announces Proposed Qualifying Transaction
CALGARY, ALBERTA--(Marketwired - Feb 27, 2014) - Crest Petroleum
Corp. ("Crest") (TSX-VENTURE:CTP.P) is pleased to announce that it
has entered into:
- a share purchase agreement dated February 27, 2014 (the "Share
Purchase Agreement") with Indio Well Services Corp. ("Indio") and
the shareholders of Indio, being Everett (Will) Willard Gray II,
Sixto Medrano Jr. and Jefferey Dale Barger (collectively, the
"Vendors"), in order to create a new oil and gas well services
company in the Permian Basin under the direction of a new
management team and board of directors (the "Proposed
Transaction"). The Proposed Transaction will constitute a
Qualifying Transaction as that term is defined by the TSX Venture
Exchange (the "Exchange"); and
- an engagement letter with AltaCorp Capital Inc. with respect to
a brokered 'best efforts' private placement of a minimum of
16,000,000 subscription receipts of Crest ("Crest Receipts") at a
price per Crest Receipt of $0.25 for gross proceeds of not less
than $4,000,000 (the "Private Placement").
Share Purchase Agreement
Pursuant to the Share Purchase
Agreement, Crest will purchase all of the issued and outstanding
shares of common stock in the capital of Indio (the "Indio Shares")
from the Vendors for an aggregate purchase price of $2,500,000 to
be paid by the issuance of 10,000,000 common shares in the capital
of Crest ("Crest Shares") at a deemed price per Crest Share of
$0.25.
The completion of the Proposed
Transaction is subject to a number of conditions including, but not
limited to:
- receipt of Exchange approval;
- completion of the Private Placement;
- each of the Vendors having entered into executive employment
agreements with Crest;
- the Rig Contract (defined below) having not been terminated;
and
- adequate financing arrangements having been entered into to
permit Indio to complete the purchase of the Rigs (defined
below).
Subject to the foregoing
conditions being satisfied or waived, Crest expects to close the
Proposed Transaction on or about May 15, 2014 and in any event, by
no later than May 31, 2014.
Private Placement
Crest has engaged AltaCorp
Capital Inc. as sole agent with respect to the Private Placement.
Each Crest Receipt will, upon the satisfaction of certain
conditions including the completion of the Proposed Transaction, be
exchanged for one Crest Share. The completion of the Private
Placement is subject to a number of conditions, including, but not
limited to, receipt of Exchange approval.
About Indio
Indio is a private company
incorporated under the laws of the State of Nevada on February 7,
2014. Indio was incorporated with the intent to establish and grow
a high quality service rig business in the Permian Basin. Since
incorporation, Indio has had no operations other than identifying
and evaluating the acquisition of service rigs, developing a
business plan and discussing and negotiating the terms of the Share
Purchase Agreement and the Rig Contract (defined below).
The Indio Shares are
beneficially owned by, or subject to the direction or control
of:
- Will Gray (who beneficially owns, controls or directs
approximately 33% of the issued and outstanding Indio Shares);
- Sixto Medrano Jr. (who beneficially owns, controls or directs
approximately 33% of the issued and outstanding Indio Shares);
and
- Jefferey Barger (who beneficially owns, controls or directs
approximately 34% of the issued and outstanding Indio Shares).
The CEO of Indio is Will Gray, the President of Indio is Sixto
Medrano Jr. and the Chief Safety Officer and Chief Operations
Officer is Jefferey Barger.
Pursuant to a purchase agreement dated February 27, 2014 (the
"Rig Contract") between Indio and Rig Works Inc., Indio will
acquire eight new Mustang 550 service rigs (collectively, the
"Rigs") for an aggregate purchase price of approximately US$7.5
million (not including sales tax) to be paid, in part, from the
proceeds of the Private Placement (the "Asset Acquisition"). Indio
will arrange for lease financing with respect to the remaining
purchase price, being up to 80% of the aggregate. Crest will issue
a press release once the lease financing terms have been
finalized.
Indio's management has spent a significant amount of time
evaluating the various service rigs available for purchase from
different manufacturers and ultimately determined that the Rigs
would best suit Indio's needs. The Rigs are heavy duty with 275,000
pounds of pulling power and an operational depth capacity of
approximately 18,000 feet which will allow the Rigs to service over
90% of the current wells in the Permian Basin. Indio opted for a
104 foot mast which balances maneuvering capabilities while the
mast is being transported on top of the rig and servicing
capabilities while the mast is extended during operations.
The initial eight Rigs will be acquired over a six month period
following completion of the Proposed Transaction. Rig Works Inc.'s
design and fabrication facility is located in Odessa, Texas which
is in the heart of the Permian Basin and approximately 20 miles
from Midland, Texas.
The completion of the Asset Acquisition is subject to a number
of conditions including, but not limited to, all conditions
precedent to the completion of the Proposed Transaction having been
satisfied or waived. The Asset Acquisition is expected to close
concurrently with the closing of the Proposed Transaction.
About Crest
Crest is a "reporting issuer" in the Provinces of Alberta,
British Columbia and Ontario and was incorporated under the laws of
the Province of British Columbia on January 24, 2012. The Crest
Shares are listed for trading on the Exchange under the trading
symbol "CTP.P" and Crest is classified as a "capital pool company"
pursuant to Policy 2.4 of the Exchange. As a capital pool company,
the current business of Crest is to identify and evaluate potential
acquisitions of commercially viable businesses and assets that have
the potential to generate profits and add shareholder value. Except
as specifically contemplated in the policies of the Exchange, until
the completion of a Qualifying Transaction, Crest will not carry on
business, other than the identification and evaluation of
companies, businesses or assets with a view to completing a
Qualifying Transaction. Since incorporation, Crest has had no
operations other than identifying and evaluating potential
acquisitions of oil and gas related businesses, including Indio,
and discussing and negotiating the terms of the Share Purchase
Agreement.
The President and CEO of Crest
is Toby Pierce and the CFO and Corporate Secretary of Crest is
James Greig.
Post-Transaction
Upon completion of the
Proposed Transaction, Crest, through Indio, will acquire, operate
and utilize the Rigs to assist oil companies in exploiting their
oil and gas properties in the Permian Basin which represents the
largest service rig market in the US. Services to be provided will
include: workovers, completions, downhole interventions and
potentially, plugging and abandonment work. Through Indio, Crest,
will provide the Rigs, service equipment and crews for the
foregoing tasks, which are performed on both oil and natural gas
wells.
Upon completion of the
Proposed Transaction, the board of directors of Crest will consist
of Toby Pierce (Chair), David Schmidt, Will Gray, Sixto Medrano Jr.
and Peter Mark Stark and the officers of Crest will consist of Will
Gray (Chief Executive Officer), Sixto Medrano Jr. (President),
Jefferey Barger (Chief Safety Officer and Chief Operating Officer),
Toby Pierce (Executive Director), Anthony Jackson (Chief Financial
Officer) and Janan Paskaran (Corporate Secretary). Sixto Medrano
Sr. will serve as an advisor to the Board. Crest will draw heavily
from Sixto Medrano Jr. and Sixto Medrano Sr.'s 85 years of combined
well servicing experience in the Permian Basin.
Set forth below is information
on each individual that is currently anticipated to be a director,
officer or advisor of Crest upon completion of the Proposed
Transaction:
Will Gray - Chief Executive Officer & Director; Midland,
Texas: has over 10 years of experience in the energy
industries, which includes senior executive experience through his
roles as Executive Vice President and Head of Capital Markets and
Business Development at Resaca Exploitation, Inc., Chairman and
Chief Executive Officer of Cross Border Resources, Inc. where Mr.
Gray arranged for over $80 million in both debt and equity
financing for the company and was solely responsible for $73
million worth of acquisition and disposition transactions, Chairman
and Chief Executive Officer of Well Renewal Inc., a micro-cap
exploration and production company, Founder of WS Oil and Gas
Limited, a mergers and acquisitions and capital raising consulting
company to the energy sector and gained experience from various
sales and marketing positions with a number of Fortune 500
companies including Prudential Financial Inc., Pharmacia Corp.,
Medtronic, Inc., and Guidant Corp. Mr. Gray holds a Bachelor of
Science in Business Management from Texas State University. Mr.
Gray is currently Secretary and director of Westcott Products
Corp.
Sixto Medrano Jr. - President & Director; Midland,
Texas: has over 35 years of experience in the energy services
industry, with an emphasis on well servicing, focused within the
Permian Basin, including his roles ranging from operator to
supervisor at Key Energy Services, Inc. and rig supervisor at
Pioneer Well Services, a wholly owned subsidiary of Pioneer Natural
Resources Company where he played a key role in growing the rig
fleet from 8 to 30 well servicing rigs.
Jefferey Barger - Chief Safety Officer & Chief Operating
Officer; Midland, Texas: has over 15 years of experience in
the health and safety industry, including his roles at several
Fortune 500 medical device companies, including Medtronic, Inc.,
St. Jude Medical Inc. and Boston Scientific Corporation and serving
for 4 years in the armed forces as a combat medic which included
rotations in both the Gulf War and Korea. Mr. Barger is a
registered nurse.
Toby Pierce - Executive Director & Chair; London, United
Kingdom: has over 17 years of experience in the geological,
resource and financial industries, including his roles as Partner
and Senior Oil Equity analyst with GMP Securities L.P. and Tristone
Capital Global Inc. in London, England, where he built up extensive
experience in merger and acquisition transactions, initial public
offerings, fund raisings, equity and asset valuations and
investment advice. Mr. Pierce has worked across North and Latin
America as a geologist in the mining and exploration industry and
owned and operated a company that provided well-site geological
services in the Western Canadian Sedimentary Basin. Mr. Pierce
holds a Master of Business Administration from the Rotman School of
Business and a Bachelor of Earth Sciences from the University of
Victoria. Mr. Pierce is currently a director of North Country Gold
Corp., Chelsea Oil and Gas Ltd., Trigold Resources Inc., Jordan
Energy and Mining Ltd. (a UK private company) and Redtail Metals
Corp.
Anthony Jackson - Chief Financial Officer; Vancouver,
British Columbia: has extensive experience in the financial
services industry, including his roles as Principal at BridgeMark
Financial Corp., Founder of Jackson & Company Chartered
Accountants, senior analyst at a boutique investment banking firm,
an accountant with Ernst & Young LLP and most recently director
and chief financial officer positions at publicly traded
corporations in the metals and mining industry. Mr. Jackson is a
chartered accountant.
David Schmidt - Director; Vancouver, British Columbia:
has over 13 years of experience in the mineral exploration industry
through his role as a consultant to mineral exploration companies
where he assists with financings, corporate and financial
disclosure and corporate development. Mr. Schmidt is a director and
Vice President of Corporate Development of Ryan Gold Corp., a
director and Chief Executive Officer of Oceanside Capital Corp.,
and a director of Waymar Resources Ltd. and Nanton Nickel Corp.
Peter Mark Stark - Director; Fair Oaks Ranch, Texas:
has over 29 years of experience at the chief financial officer
level in energy, agribusiness, commercial real estate and
manufacturing/distribution industries, including his roles as Vice
President of Finance of Forge Energy, LLC, a consultant to Doral
Energy Corp. and subsequently the Chief Financial Officer and
Treasurer of Cross Border Resources, Inc., Vice President-Treasurer
and Chief Financial Officer of TXCO Resources, Inc., Chief
Financial Officer of Venus Exploration Inc. and Chief Financial
Officer of Dawson Production Services Inc. Mr. Stark holds a Master
of Business Administration from Southern Methodist University and a
Bachelor of Business Administration from the University of Texas
and is an active member of Financial Executives International.
Janan Paskaran - Corporate Secretary; Calgary, Alberta:
is a partner at the law firm of Torys LLP. His practice focuses on
corporate and securities law, with an emphasis on international
transactions. Mr. Paskaran has extensive experience representing
public and private issuers in a wide variety of financing, business
combination and merger and acquisition transactions, including both
private and publicly traded issuers. Mr. Paskaran holds a law
degree from the University of Western Ontario.
Sixto Medrano Sr. - Advisor; Midland, Texas: has over
54 years of experience in the energy services industry focused
within the Permian Basin, including his current role as Vice
President of Operations of Key Energy Services, Inc. (formerly,
Yale E. Key). Over the past 54 years, Mr. Medrano Sr. has worked
every facet of well servicing units and has supervised hundreds of
employees while displaying an unparalleled safety record and has
extensive knowledge of completion and work over operations within
the Permian Basin.
Indio will be headquartered in
Midland, Texas.
The Crest Shares will remain
halted pending receipt of applicable documentation by the Exchange.
Crest will be categorized in the Exchange's "Industrial"
sector.
Arm's Length Qualifying
Transaction
The Proposed Transaction was
negotiated by the parties who are dealing at arm's length with each
other and therefore, in accordance with the policies of the
Exchange, is not a Non-Arm's Length Qualifying Transaction, as that
term is defined by the Exchange. As a result, approval of the
Proposed Transaction by holders of the Crest Shares is not required
under the policies of the Exchange as a condition to the completion
of the Proposed Transaction.
Sponsorship
The Exchange also requires the
Proposed Transaction to be sponsored by a participating
organization of the Exchange. Based on the fact that Crest intends
to complete the Private Placement prior to May 15, 2014, Crest will
apply to the Exchange for an exemption from the sponsorship
requirement in connection with the Proposed Transaction. However,
there is no assurance that the exemption will be granted. If such
exemption is not granted, Crest will be required to engage a
sponsor for the Proposed Transaction.
Further Information
Pursuant to Policy 2.4 of the
Exchange, it is expected that Crest will file on SEDAR a Filing
Statement in respect of the Proposed Transaction at least seven
business days prior to the closing of the Proposed Transaction. The
Filing Statement will include full disclosure regarding the
Proposed Transaction, Crest, Indio and the Rigs.
Reader Advisory
The completion of the Proposed
Transaction is subject to a number of conditions, including but not
limited to, Exchange acceptance. There can be no assurance that the
Proposed Transaction will be completed as proposed or at all.
Investors are cautioned that,
except as disclosed in the filing statement to be prepared in
connection with the Proposed Transaction, any information released
or received with respect to the Proposed Transaction may not be
accurate or complete and should not be relied upon. Trading in the
securities of a capital pool company should be considered highly
speculative.
The TSX Venture Exchange
has in no way passed upon the merits of the Proposed Transaction
and has neither approved nor disapproved of the contents of this
press release.
Neither the TSX Venture
Exchange nor its regulation services provider (as that term is
defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this press
release.
FORWARD-LOOKING STATEMENTS
This news release contains
forward-looking statements and forward-looking information within
the meaning of applicable securities laws (collectively,
"forward-looking statements"). The use of any of the words
"expect", "anticipate", "continue", "estimate", "objective",
"ongoing", "may", "will", "project", "should", "believe", "plans",
"intends" and similar expressions are intended to identify
forward-looking statements. More particularly and without
limitation, this news release contains forward-looking statements
concerning the terms of the Proposed Transaction, the Asset
Acquisition and the Private Placement, the completion of the
Proposed Transaction, the Asset Acquisition and the Private
Placement, the filing of the Filing Statement, the proposed
directors and officers of Crest and Crest's business upon
completion of the Proposed Transaction. The forward-looking
statements are based on certain key expectations and assumptions
made by Crest, including expectations and assumptions concerning
the results of its due diligence review of Indio and the Rigs,
Crest's ability to complete the Proposed Transaction and the
Private Placement and the ability of Indio to complete Asset
Acquisition, including Indio's ability to obtain adequate lease
financing with respect to the Rigs. Although Crest believes that
the expectations and assumptions on which such forward-looking
statements are based are reasonable, undue reliance should not be
placed on the forward-looking statements because Crest can give no
assurance that they will prove to be correct. By its nature, such
forward-looking statements are subject to various risks and
uncertainties, which could cause the actual results and
expectations to differ materially from the anticipated results or
expectations expressed. These risks and uncertainties, include, but
are not limited to, the results of the due diligence review of
Indio or the Rigs being less than satisfactory, Crest being unable
to complete the Proposed Transaction or the Private Placement,
Indio being unable to complete the Asset Acquisition and that the
proposed directors and officers of Crest are unable to serve as
directors and officers of Crest. Readers are cautioned not to place
undue reliance on these forward-looking statements, which are given
as of the date hereof, and to not use such forward-looking
statements for anything other than their intended purpose. Crest
undertakes no obligation to update publicly or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by law.
All figures are in Canadian
dollars except where noted.
Crest Petroleum Corp.Toby PiercePresident and Chief Executive
Officer+44 7517 131 747