Razor Energy Corp. (“Razor” or the “Company”) (TSXV: RZE) is
pleased to announce that it has entered into a definitive agreement
to acquire certain non-operated working interest assets in its Swan
Hills, Alberta core region (the “Assets”) for a total purchase
price of $5 million cash, subject to certain closing adjustments
(the “Acquisition”). The Assets consist of Swan Hills Unit No. 1
(the “Unit”), Judy Creek Gas Plant (the “Plant”) and South Swan
Hills Unit Gas Gathering System (the “Gathering System”) at 32.5%,
8.6% and 22.8% working interest, respectively. Closing is
anticipated to occur in due course within August 2021.
The Acquisition will be funded by Arena
Investors, LP (“Arena”) by way of an amended term loan agreement in
the TOTAL principal amount of US$18,158,182 (the “Amended Term
Loan”). Arena Investors is an institutional asset manager with
US$2.2 billion of committed assets under management that
specializes in providing innovative capital solutions for middle
market companies.
The Amended Term Loan will be amortized and
repaid over a total of 37 months, where payments began in April
2021 and will conclude in April 2024. The increase in principal
will fund the purchase of the Assets, associated joint account
liability, and interim purchase price adjustments. These price
adjustments are capital expenditures and expenses from the
effective date until the anticipated closing date. In that time
there has been significant expenditures and expenses including well
reactivations, pipeline repairs, and infrastructure projects. The
funded principal amount, after the original issuer discount, is
US$8.035 million, less related fees and expenses. Other terms of
the Amended Term Loan are materially unchanged from the initial
term loan as further described in the Company’s press release dated
February 18, 2021. This includes a fixed annual interest rate of
7.875%, with security provided by a first lien on all assets within
Razor Royalties Limited Partnership and Razor Holdings GP Corp.
ACQUISITION HIGHLIGHTS
Acquisition Metrics
|
•
Proved Developed Producing Reserves (“PDP”)
1 |
2.7 MMboe |
|
• Production |
950 boepd (95% light oil & ngl’s) |
|
• Estimated annual base decline
rate |
10 percent |
|
• Asset Retirement Obligation (“ARO”)
(undiscounted) 2 |
$22.9 million ($2.2 million discounted) |
|
• Estimated annual ARO spend
|
$0.3 million |
Notes:1 The reserves information is based on an
evaluation by Sproule Associates Ltd. (“Sproule”) of the reserves
associated with the Swan Hills Unit No. 1 asset in its report dated
December 31, 2020, which was prepared in accordance with the COGE
Handbook and NI 51-101 and mechanically updated to July 1, 2021. 2
Asset Retirement Obligation calculated in accordance with the
policies and directives of the Alberta Energy Regulator.
STRATEGIC RATIONALE
Razor and the Oil & Gas
Operations
Razor has intimate knowledge of the Assets
through its existing working interest positions and is excited with
the opportunity to consolidate assets in our core region. On
closing this Acquisition, Razor will enjoy a 49.7 percent
non-operated working interest in the Unit while the Operator,
Canadian Natural Resources Ltd., maintains its 41.9 percent working
interest. The Company will also benefit from increasing its working
interest in critical area infrastructure, including the Plant and
Gathering System to 38.1 and 43.9 percent, respectively.
The Acquisition enables the Company to
cost-effectively add long-life, industry-leading ten percent annual
base decline, low-risk, light oil reserves (41o API), production
and cash flow underpinned by an improving commodity price
environment as crude oil supply/demand returns to balance in the
post-COVID era.
FutEra and the Renewable Power
Operations
Strategically, Futera Power Corp. (“FutEra”), a
subsidiary of Razor, has identified the potential for additional
geothermal and/or natural gas power generation projects in the
Unit. The volume and temperature of the produced fluids processed
through two of the Unit’s main facilities are highly analogous to
FutEra’s current South Swan Hills Unit Co-Produced Geothermal Power
Generation Plant (the “Geothermal Project”). Construction has begun
on this first-of-its-kind Geothermal Project, and the learnings,
and cash flow outcomes, can be directly applied to the Unit.
As well, Razor is excited about increasing its
working interest in the Plant as we envision the potential to
advance Alberta’s hydrogen initiative and the opportunity to
implement Carbon Capture, Utilization and Storage (“CCUS”) in the
greater Swan Hills area. Design and planning have begun on both
small-scale hydrogen production and a CCUS facility.
ONGOING INNOVATION
Razor continues to identify opportunities to
liberate alternative sources of energy while measurably improving
the environmental and social impacts of our business.
- FutEra has commenced project
execution on its Geothermal Project in Swan Hills. Stage Gate 1 is
fully funded and FutEra is securing additional financing to
complete Stage Gate 2. Construction of the power plant has
commenced with estimated completion within the first quarter of
2022. Provincially, Alberta Innovates and Emissions Reduction
Alberta, and federally, Natural Resources Canada have provided
funding grants, of which Razor has received $8.6 million to
date.
- FutEra has identified, and is in
process of reviewing and capturing, additional projects including
solar, wind and well-head geothermal. FutEra recently commissioned
its wholly owned 10 petahash bitcoin mining operation which
includes supplying self-generated power and the mining
installation.
- Razor has commenced construction to
repurpose certain facilities in Virginia Hills to become a Waste
Management Component employing bioremediation to treat
hydrocarbon-impacted soils. This soil treatment facility will be
integral to Razor’s Virginia Hills Area Based Closure operations
and is anticipated to be operational in the third quarter of 2021.
FutEra is developing a pure green power supply solution for the
waste management facility.
About Razor
Razor is a publicly traded junior oil and gas
development and production company headquartered in Calgary,
Alberta, concentrated on acquiring, and subsequently enhancing, and
producing oil and gas from properties primarily in Alberta. The
Company is led by experienced management and a strong, committed
Board of Directors, with a long-term vision of growth focused on
efficiency and cost control in all areas of the business. Razor
currently trades on TSX Venture Exchange under the ticker
“RZE.V”.
www.razor-energy.com
About FutEra
FutEra leverages Alberta’s resource industry
innovation and experience to create transitional power and
sustainable infrastructure solutions to commercial markets and
communities, both in Canada and globally. Currently FutEra is
developing a 21 MW co-produced geothermal and natural gas hybrid
power project in Swan Hills, Alberta.
www.futerapower.com
For additional information please
contact:
Doug BaileyPresident and Chief Executive Officer |
|
Kevin BraunChief Financial Officer |
|
Razor Energy
Corp.800, 500-5th Ave SW Calgary, Alberta T2P 3L5Telephone:
(403) 262-0242 |
READER
ADVISORIES
FORWARD-LOOKING STATEMENTS:
This press release may contain certain statements that may be
deemed to be forward-looking statements. Such statements relate to
possible future events, including, but not limited to, the
completion of the Acquisition, the closing of the Amended Term
Loan, the Company’s capital program and other activities such as
future financings relating to the development of geothermal and
other environmentally and socially innovative projects. All
statements other than statements of historical fact may be
forward-looking statements. Forward-looking statements are often,
but not always, identified by the use of words such as
“anticipate”, “believe”, "expect", “plan”, “estimate”, “potential”,
“will”, “should”, “continue”, “may”, “objective” and similar
expressions. The forward-looking statements are based on certain
key expectations and assumptions made by the Company, including but
not limited to expectations and assumptions concerning the
availability of capital, current legislation, receipt of required
regulatory approvals, the timely performance by third-parties of
contractual obligation, the success of future drilling and
development activities, the performance of existing wells, the
performance of new wells, the Company’s growth strategy, general
economic conditions, availability of required equipment and
services, prevailing commodity prices, price volatility, price
differentials and the actual prices received for the Company's
products. Although the Company believes that the expectations and
assumptions on which the forward-looking statements are based are
reasonable, undue reliance should not be placed on the
forward-looking statements because the Company can give no
assurance that they will prove to be correct. Since forward-
looking statements address future events and conditions, by their
very nature they involve inherent risks and uncertainties. Actual
results could differ materially from those currently anticipated
due to a number of factors and risks. These include, but are not
limited to, risks associated with the oil and gas industry and
geothermal electricity projects in general (e.g., operational risks
in development, exploration and production; delays or changes in
plans with respect to exploration or development projects or
capital expenditures; variability in geothermal resources; as the
uncertainty of reserve estimates; the uncertainty of estimates and
projections relating to production, costs and expenses, and health,
safety and environmental risks), electricity and commodity price
and exchange rate fluctuations, changes in legislation affecting
the oil and gas and geothermal industries and uncertainties
resulting from potential delays or changes in plans with respect to
exploration or development projects or capital expenditures. In
addition, the Company cautions that COVID-19 may continue to have a
material adverse effect on global economic activity and worldwide
demand for certain commodities, including crude oil, natural gas
and NGL, and may continue to result in volatility and disruption to
global supply chains, operations, mobility of people and the
financial markets, which could continue to affect commodity prices,
interest rates, credit ratings, credit risk, inflation, business,
financial conditions, results of operations and other factors
relevant to the Company. The duration of the current commodity
price volatility is uncertain. Please refer to the risk factors
identified in the annual information form and management discussion
and analysis of the Company which are available on SEDAR at
www.sedar.com. The forward-looking statements contained in this
press release are made as of the date hereof and the Company
undertakes no obligation to update publicly or revise any
forward-looking statements or information, whether as a result of
new information, future events or otherwise, unless so required by
applicable securities laws.
ADVISORY PRODUCTION
INFORMATION: Unless otherwise indicated herein, all
production information presented herein is presented on a gross
basis, which is the Company's working interest prior to deduction
of royalties and without including any royalty interests.
BARRELS OF OIL EQUIVALENT: The
term "boe" or barrels of oil equivalent may be misleading,
particularly if used in isolation. A boe conversion ratio of six
thousand cubic feet of natural gas to one barrel of oil equivalent
(6 Mcf: 1 bbl) is based on an energy equivalency conversion method
primarily applicable at the burner tip and does not represent a
value equivalency at the wellhead. Additionally, given that the
value ratio based on the current price of crude oil, as compared to
natural gas, is significantly different from the energy equivalency
of 6:1; utilizing a conversion ratio of 6:1 may be misleading as an
indication of value.
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
news release.
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