TIDMTOM
RNS Number : 4621S
TomCo Energy PLC
16 November 2021
16 November 2021
TOMCO ENERGY PLC
("TomCo" or the "Company")
Acquisition of an initial 10% interest in TSHII and Loan
Agreement
TomCo Energy plc (AIM: TOM), the US operating oil development
group focused on using innovative technology to unlock
unconventional hydrocarbon resources, is pleased to provide a
further update with respect to the Company's 100% owned subsidiary,
Greenfield Energy LLC's ("Greenfield"), potential acquisition of up
to 100% of the ownership and membership rights and interests in Tar
Sands Holdings II LLC ("TSHII") (the "Membership Interests"), as
announced on 9 June 2021 (the "Agreement").
The Company is pleased to announce that Greenfield has now
exercised its option to acquire an initial 10% of the Membership
Interests for a total cash consideration of US$2 million, of which
an amount of US$500,000 was satisfied by crediting the deposits
paid previously. Accordingly, Greenfield now retains an exclusive
option, at its sole discretion, to acquire the remaining 90% of the
Membership Interests for additional cash consideration up to 31
December 2022, as detailed in the Company's announcement of 9 June
2021.
Alongside the acquisition of the initial 10% of the Membership
Interests, a newly incorporated subsidiary of Greenfield has been
granted a lease over approximately 320 acres of the 760 acre site
owned by TSHII (the "Lease Area"), for a nominal consideration and
annual rental of US$320, together with a 12% of net sales royalty
per barrel of conventional oil, gas or sulphur produced and removed
from the Lease Area.
The lease provides Greenfield's subsidiary with the exclusive
right to explore, drill, and mine for, and extract, store, and
remove oil, gas, hydrocarbons, and other associated substances on
and from the Lease Area, together, inter alia, with the right to
erect, construct and use such plant and equipment and
infrastructure as required. The lease is for an initial term of 10
years and will continue thereafter for so long as any oil, gas or
other hydrocarbons are being produced from the Lease Area or
drilling operations are being prosecuted or as the parties may
agree.
Loan Agreement
The US$1.5 million balance of the consideration paid to secure
the acquisition of the initial 10% of the Membership Interests has
been financed by way of an unsecured US$1.5 million loan from
Valkor Oil & Gas LLC ("Valkor") to Greenfield (the "Loan").
The Loan is repayable by Greenfield through a number of
potential options, or combination of such options, at its sole
election, such combination adding up to the US$1.5 million
principal amount of the Loan, plus any applicable interest or fees
incurred. The repayment options include granting a share of
potential net production revenues to initially offset the principal
amount and for a period of five years thereafter from any oil
well(s) planned to be drilled on the Lease Area, but for which the
requisite further funding and permits have not yet been secured;
and/or straight repayment of the principal amount plus interest and
fees amounting to 15% of the principal amount of the loan, payable
on the maturity date. In any event, a minimum of US$1.5 million
must be repaid on or before 30 May 2022. To the extent that any
part of the principal amount has not been paid by the scheduled
maturity date (which may be extended by mutual agreement of the
parties) then interest of 2% per month shall be applied to such
unpaid amount from time to time until it has been repaid in
full.
Greenfield is engaged in ongoing discussions regarding funding
options to potentially achieve the ultimate acquisition of 100% of
the Membership Interests, together with the drilling of a number of
production oil wells and the planned first 5,000 barrels of oil per
day production plant, whilst progressing other preparatory work.
However, there can be no certainty that Greenfield can secure the
requisite funding or the permitting required.
Further announcements will be made as and when appropriate.
Related Party Transaction
As a former JV partner, Valkor is considered to be a related
party of the Company (as defined in the AIM Rules for Companies)
and, accordingly, the Loan constitutes a related party transaction
pursuant to AIM Rule 13. The TomCo directors, having consulted with
Strand Hanson Limited, the Company's Nominated Adviser, consider
that the terms of the Loan are fair and reasonable insofar as the
Company's shareholders are concerned.
Commenting, John Potter, CEO of TomCo, said : "We are delighted
to have completed this purchase of an initial 10% stake in TSHII.
The acquisition provides Greenfield with a base from which to
accelerate its plans to pursue both the drilling of certain near
term oil production wells and thereafter the acquisition of the
balancing 90% of the Membership Interests and its first commercial
scale plant, subject to funding. We expect the permitting process
for the production wells to be completed in Q1 2022, following the
drilling of three exploration wells intended to occur in December
2021.
"Greenfield is currently focused on commercial negotiations with
third parties in order to seek to secure the funding for its future
plans, together with progressing the required permitting and other
preparatory work. We look forward to providing further updates in
due course."
Enquiries :
TomCo Energy plc
Malcolm Groat (Chairman) / John Potter (CEO) +44 (0)20 3823 3635
Strand Hanson Limited (Nominated Adviser)
James Harris / Matthew Chandler +44 (0)20 7409 3494
Novum Securities Limited (Broker)
Jon Belliss / Colin Rowbury +44 (0)20 7399 9402
IFC Advisory Limited (Financial PR)
Tim Metcalfe / Florence Chandler +44 (0)20 3934 6630
For further information, please visit www.tomcoenergy.com .
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 as it forms part of
United Kingdom domestic law by virtue of the European Union
(Withdrawal) Act 2018.
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