March 15, 2021 20:41 ET | Source: Leucrotta Exploration Inc. Leucrotta Exploration Inc.
This press release does not apply to publication or dissemination in the United States. Failure to comply with this restriction may constitute a violation of U.S. securities laws.
Calgary, Alberta, March 15, 2021 (Global News Agency)-Leucrotta Exploration Inc. ("Leucrotta" or "Company") (TSXV-LXE) is pleased to announce that it has reached an agreement with a consortium of underwriters , Through a US$20 million purchase transaction financing ("financing") issued by a short-term prospectus. The company will simultaneously conduct a non-brokered private placement of the company's US$2 million circulating units. The company also reached a definitive agreement with a listed oil and gas company in Alberta on its non-strategic land ("asset sale"), including 5% of the Leucrotta Monteney land base, with a total consideration of US$30.0 million. The company intends to use part of the proceeds from financing and asset sales to advance the high GOR (gas to oil ratio) light oil window ("Mica Project") at Mica's Lower Montney. The acceleration of the mica project will transform Leucrotta into a high-growth purely operating Montney entity with one of the largest consecutive positions in the Montney light oil window. The successful drilling of the mica project and the expected debt capacity are expected to create cash flow sustainability. Management estimates that the mica project can increase the production of Leucrotta to 15,000-20,000 barrels per day within three years.
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Rob Zakresky, Leucrotta’s CEO and President, commented: “We are very pleased to be able to launch our Mica Pad Development drilling program because we have been drilling for many years. Leucrotta has captured and portrayed Montney’s huge resources and is happy to be able to Become a financial manifestation of this value for our shareholders."
New funds start mica development while minimizing dilution
While generating cash flow, shareholders still have access to a large number of existing resources. The mica project plans to increase production to more than 30,000 boepd and develop 30 plots of land in only one of the three Montney districts. However, Leucrotta has more than 240 net plots of land, of which Montney is 300 meters thick on average, has many potential benches, has 17.8 billion barrels of OOIP and 17.2 tcf of OGIP. Shareholder value can be realized outside of the mica project because:
High economical drilling inventory in the mica high GOR light oil window
The mica project is expected to start using modern technology in 2021. The initial 3-4 well pad will contain 2,400 meters of horizontal branch pipes, the latest fracturing design and increased fracturing strength. Oil wells will be produced through existing infrastructure and will become the basis for accelerated development beyond 2022. The mica project is only modeled in the Lower Moni formation, but Leucrotta will conduct production tests on the mica foundation and the upper Moni formation in 2021 to determine whether the company can further improve economic efficiency through the stacked development plan.
Accelerated development (expanded Pad Development) is expected to bring production to more than 30,000 boepd, and integrate existing Leucrotta infrastructure, expand existing infrastructure and utilize available third-party infrastructure where appropriate. Leucrotta estimates that it will take about five years to reach its production goals.
The mica project has the following characteristics, which can improve economy and facilitate development:
Leucrotta has signed an agreement with a consortium of underwriters (the “Agreement”) led by Haywood Securities (as the sole bookrunner) and Echelon Wealth Partners Inc. (collectively, the “underwriters”) under which the underwriters have Agree to purchase on the basis of a purchase transaction for resale to the public: (i) up to approximately 27.4 million shares of the company ("unit"), including one common share ("common stock") in the capital of the company ") and 0.5 shares Common stock purchase warrants (each entire warrant, one "warrant"), at a price of US$0.73 per unit (the "issue price"), with a total income of approximately US$20 million. The exercise price of the warrants It is US$1.00 per common share, and the term is two years from the financing deadline ("Financing Deadline").
The underwriter is also granted a non-transferable option ("over-allotment option"), which can be exercised in whole or in part from time to time at any time 30 days after the financing deadline to purchase up to approximately 4.1 million additional units from Leucrotta, as per issue Calculated by the price, the total additional revenue is as high as approximately US$3 million. If the underwriters exercise the over-allotment option in full, the total proceeds from this offering (including the over-allotment option) will be approximately $23 million.
Common shares issued under the financing will be distributed in Canadian provinces (except Quebec) through a short prospectus. Only in accordance with the revised US Securities Act of 1933 and certain other jurisdictions outside of Canada that the company and the underwriter may agree to, part of the financing will be private placement in the United States through Rule 144A to qualified institutional buyers on the basis of private placement. There is no need to file a prospectus in any jurisdiction outside of the Canadian jurisdiction.
The company will simultaneously conduct a non-brokerage managed private placement of up to 2 million shares of the company ("tradable shares"), including one common share ("CDE") that will be issued in circulation in accordance with Canadian development costs in accordance with the Income Tax Law (Canada) ("Tradable shares") and a tradable share purchase warrant ("tradable warrant") at a price of US$0.75 per tradable unit for total proceeds of up to US$1.5 million. The exercise price of the tradable warrants is US$1.00 per tradable share, and the term is three years from the date of issuance.
The financing is expected to be completed on or around March 31, 2021, and is subject to certain conditions, including but not limited to obtaining all necessary approvals, including TSX Risk Exchange approval.
The company’s board of directors has approved the granting of incentive stock options ("options") to certain directors and officers of its stock option plan to acquire up to 4 million shares of the company's common stock. The options can be exercised at a price of US$0.78 per common share within five years and vest within three years.
After the options are granted, Leucrotta will have a total of 17.6 million outstanding options. Leucrotta's share-based incentive plan limits the total number of outstanding common stock options and performance warrants to no more than 10% of the outstanding and outstanding common stock. As of the date of this press release, the total number of ordinary shares of stock options outstanding accounted for approximately 8.8% of the outstanding ordinary shares.
Leucrotta signed a definitive agreement to sell 10.25 plots of Montney land for a purchase price of US$30 million, including approximately 375 boepd of production. The asset sale is scheduled to be completed on or around April 1, 2021. For Leucrotta, these lands are assessed as non-strategic lands because they:
Additional transactions can increase and drive the value of assets and stocks
Given that the original Mica Project only developed 30 of the more than 240 net portions of Montney's total land, and only one of the three potential Montney areas was developed, the potential to increase shareholder value is huge. Among other things, such transactions may include:
After the financing and asset sale are completed, Leucrotta will have no debt and approximately $45 million in cash. Based on a capital plan of approximately US$30 million in 2021, Leucrotta estimates that its cash on hand will reach approximately US$20 million by the end of the year, and it has no debts.
Leucrotta predicts that the exit production rate in 2021 will be approximately 4,500 boepd (27% light oil and condensate).
RBC Capital Markets served as the financial advisor for asset sales, and Haywood Securities Inc. served as the strategic advisor for asset sales and financing.
Oil and gas indicators and disclaimer
This press release contains indicators commonly used in the oil and gas industry, such as "IRR", "OGIP" and OOIP. These terms have no standardized meaning or standardized calculation method, so it may not be possible to compare with similar measures provided by other companies. Readers are reminded not to rely too much on the information provided by these indicators or the information that can be derived from the indicators provided in this presentation. The following oil and gas indicators used in this press release have the following meanings:
IRR-Internal rate of return. IRR is the discount rate required for NPV to be zero. The rate of return specified in this press release is for illustrative purposes only. There is no guarantee that such rates of return will be achieved in the future.
NPV-Net Present Value is defined as "the present value of future cash flows minus initial capital".
PV-present value is defined as the "present value of future cash flows".
Boe-barrel of oil equivalent. All boe conversions in the report were made by converting natural gas to oil, at a ratio of 6000 cubic feet of natural gas to 1 barrel of oil equivalent. 1 Boe: The boe conversion rate of 6 Mcf is based on the energy equivalent conversion method mainly applicable to the tip of the burner, and does not represent the value equivalent of the wellhead. Readers are reminded that Boe can be misleading, especially when used alone.
For the purposes of this press release, OGIP (Original Natural Gas In Place) and OOIP (Original Oil In Place) are equivalent to total oil in place ("TPIIP").
TPIIP, as defined in the Canadian Oil and Gas Assessment Manual ("COGEH"), is an estimate of the amount of oil originally present in natural deposits. It includes the estimated amount of oil contained in the known reserves prior to production as of a given date, plus the estimated amount in the undiscovered reserves (equivalent to "total resources"). It is uncertain that any part of the resource will be discovered. If discovered, it is impossible to determine whether the production of any part of the resource is commercially viable.
The OGIP and OOIP estimates cited in this press release are unaudited internal estimates, effective from December 31, 2020, and prepared by qualified reserve appraisers in accordance with the COGEH manual. "Internal estimate" refers to the estimate drawn by the company's internal APEGA certified engineers and geologists and compiled in accordance with the national document 51-101-Oil and Gas Activity Disclosure Standard. The product type of the OOIP number is "tight oil", and the product type of the OGIP number is "shale gas". The location of the resource is the land depicted in orange on the map on page 1 of this press release, excluding the part marked "Disposal". Of the 246 net segments, Leucrotta has a 95% average ownership work interest (258 total segments). The key variables related to the evaluation are porosity, reservoir thickness, pressure, water saturation and gas composition. As the distance from the existing well increases, these variables have increasing uncertainties, including positive and negative uncertainties. sex.
The "mica project" cited in this press release is a conceptual development study of the tight oil and shale gas resources (potential and contingent resources) of Leucrotta in the Lower Moni formation. The resource is located in 30 net sections (30 Total area) on the land. Leucrotta's average working interest in the land is 100%. The assessment is to use the best estimated type curve planned for a five-year period (effective from January 2021) to carry out risk-free comprehensive development of multi-stage fractured horizontal well resources. A total of US$543 million in capital (undiscounted) is required. The initial cash expenditure of the project is US$112 million, before payment is expected (5.5 years). Assume that commodity prices are the same as WTI at 50.00 US dollars/barrel; AECO CAD$2.25/GJ; foreign exchange forecasts are 1.28 Canadian dollars/US dollar. There is no guarantee that the forecast prices and cost assumptions used in the evaluation will be realized, and the differences may be significant. The actual scope of the project will depend on the availability of funds, regulatory approvals, seasonal restrictions, oil and gas prices, costs, actual drilling results, additional reservoir information obtained, and other factors. There is uncertainty as to whether the production of any part of the resource is commercially viable. For the expected resources, it is uncertain whether any part of the resources will be found, and if it is found, it is also uncertain whether it is commercially feasible to produce any of these resources. The assessment is an internal estimate prepared by a qualified reserve appraiser according to the COGE manual.
There are many inherent uncertainties in estimating the amount of light and medium oil, tight oil, shale gas, conventional natural gas, and NGL reserves and the future cash flows attributable to these reserves. The above reserves and related cash flow information are only estimates. Generally speaking, estimates of economically recoverable light and medium oil, tight oil, shale gas, conventional natural gas and NGL reserves and the resulting future net cash flows are based on many variable factors and assumptions, such as the history of assets Production, productivity, final reserve recovery rate, time and amount of capital expenditures, marketability of oil and gas, royalty rates, hypothetical effects of government agency supervision, and future operating costs, all of which may have significant differences.
Due to the impact of aggregation, individual assets may not reflect the same confidence level as the reserves estimates of all assets. This press release contains estimates of the company's individual asset reserves and FDC in the asset sale.
The reserve data contained in this press release is prepared in accordance with NI 51-101. The reserve data provided in this press release only represents a part of the disclosure required by National Instrument 51-101. All necessary information will be included in the company's annual information sheet for the year ended December 31, 2019, which is available on SEDAR at www.sedar.com.
Reserves are based on the analysis of drilling, geological, geophysical and engineering data. On a specific date, the estimated remaining amount of oil and natural gas and related substances that can be extracted from known reserves; using recognized reasonable technology and specific economic conditions. Reserves are classified according to the degree of certainty associated with the estimate as follows:
Proved reserves are those reserves that can be estimated with a high degree of certainty. The remaining amount actually mined is likely to exceed the estimated proven reserves.
Estimated reserves refer to additional reserves that are less certain and recoverable than proven reserves. The remaining quantity actually mined may also be greater or less than the sum of the estimated proved reserves plus the estimated reserves.
This press release divides the reserve information for asset sales into two categories: (i) Proved developed production (PDP); (ii) Proved plus possibly undeveloped locations. This assessment is part of the year-end corporate reserve assessment effective from December 31, 2019, and is prepared by an independent qualified reserve assessor.
The PDP reserves involve three producing gas wells.
Proved plus potential undeveloped reserves involve 21 locations on the land for asset sales, of which 10 have been confirmed to be undeveloped and 11 are possibly undeveloped.
Certain information provided in this press release may constitute "similar information" under applicable securities legislation, such as reserves and resource estimates or reserves and resources on the company's land and nearby land, total production and the production of drilling wells, the participation of companies or other industries The person is located near the land held by the company. This information comes from publicly available sources (as of the date of this press release), and the company believes that this information is largely independent in nature. The company believes that this information is relevant because it helps determine reservoir characteristics that may be of interest to the company. The company cannot confirm that similar information was prepared by qualified reserve appraisers or auditors or according to the Canadian Oil and Gas Appraisal Manual, so readers are reminded that the data the company relies on may be incorrect and may be different from the land held by the company and/ It may not represent the actual results of the oil wells that the company expects to drill or complete in the future.
This press release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. Use any words in "expect", "anticipate", "continue", "estimate", "may", "will", "should", "believe", "intend", "forecast", "plan", " "Guidelines" and similar statements are intended to identify forward-looking statements or information.
More specifically, but not limited to, this document contains forward-looking statements and information about the company’s capital plan, completion time of asset sales, management’s estimated exit productivity in 2021, management’s estimated debt and cash as of the end of the year, and management’s estimates. Source of future capital. Forward-looking statements and information are based on certain key expectations and assumptions made by the company, including those related to current commodity prices and exchange rates, applicable royalties and tax laws, future oil well productivity, and existing oil well performance. Success Drilling new wells, the availability of funds for planned activities, the availability and cost of labor and services, the exercise of over-allotment options, and the use of financing proceeds; the financing ends and all necessary approvals are received, including the approval of the Toronto Stock Exchange’s Growth Enterprise Market.
Although the company believes that the expectations reflected in such forward-looking statements and information are reasonable, it cannot guarantee that such expectations will prove to be correct. Because forward-looking statements and information involve future events and conditions, by their nature, they involve inherent risks and uncertainties. Due to various factors and risks, the actual results may differ materially from the currently expected results. These include, but are not limited to, general risks related to the oil and gas industry, such as operational risks in development, exploration and production, planned delays or changes in exploration or development projects or capital expenditures, related to productivity, costs and expenses, commodity prices, and Exchange rate fluctuations, marketing and transportation, environmental risks, competition, the ability to obtain sufficient capital from internal and external sources, and estimates and forecasts related to taxation, royalties, and changes in environmental legislation. The forward-looking statements and information contained in this document are made as of the date of this document and are intended to provide readers with the company’s expectations for the coming year. Forward-looking statements and information may not be used for other purposes. Unless required by applicable securities laws, the company assumes no obligation to publicly update or revise any forward-looking statements or information, whether due to new information, future events, or other reasons.
This contains forward-looking statements about the company's expected cash flow and debt in 2021, the purpose of which is to provide readers with an understanding of the company's expected cash flow and the company's ability to fund its expenditures based on the assumptions described in this article. Readers are reminded that this information may not be suitable for other purposes.
For more information, please contact:
LEUCROTTA EXPLORATION INC. 700, 639 –5th Ave SW Calgary, Alberta T2P 0M9 Tel: (403) 705-4525 www.leucrotta.ca
Robert Zakresky President and Chief Executive Officer
Nolan Chicoine Vice President of Finance and Chief Financial Officer
Neither TSX Venture Exchange nor its regulatory service provider (as the term is defined in the policies of TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.