Concurrently, the Company is also pleased to announce a
an underwritten offering of 48,182,000 equity subscription receipts of the Company (the 'Equity Subscription Receipts') at a price of
If the Over-Allotment Option (as defined herein) and the Convertible Loan Option (as defined herein) is exercised in full for the Convertible Loan and Public Offering, the Company will receive aggregate gross proceeds of approximately
The Financing is anchored by a strategic investor (the 'Strategic Investor') participating for an aggregate of
Acquisition Highlights
Stable production base and cash flow with material near term, low-risk upside: MOPL holds 100% operating working interests in two production sharing contracts ('PSC') in
Establishes Criterium as an operator in the
Favourable acquisition metrics: The purchase price of
Organic growth opportunities that can be realized within cashflow: Immediate production optimization resulting in 2-3x production growth: Identified work-over and infill drilling campaign commencing subsequent to the closing of the Acquisition provides expected production of 1,400 to 1,600 bbl/d in Q1 2024. Additional workover and drilling campaign in mid-2024 is expected to increase total production to 2,200 to 2,600 bbl/d and generate
Gas monetization resulting in approximately 10 MMscf/d (1,600 boe/d): Criterium intends to monetize and convert to reserves Tungkal's 20 bcf1 of 2C Contingent Resource. Gas production of up to 10 MMscf/d (1,600 boe/d) is anticipated to be under contract by 2025 (management estimate).
High impact, low-cost, exploration: Total Prospective Resources of 29 MMboe1, most notably contained in the Berkas (17 bcf + 6 MMbbl) and Cerah (26 bcf + 7 MMbbl) prospects which are near both oil and gas transportation infrastructure provide low-cost and quick transition from discovery to production. Management intends to confirm the prospectivity within the MOPL portfolio.
Strong cash position: Upon closing of the Acquisition, the Company will have a cash balance of approximately
Strategic shareholder: Upon closing of the Acquisition and satisfaction of certain escrow release conditions, the Strategic Investor will own approximately 50.1% of the common shares of the Company ('Common Shares'), on a fully diluted basis, which includes the assumed conversion of the Convertible Loan and the exercise of the Warrants (as defined herein) in the future.
Assumption of favourable debt: Favourable weighted average interest rate of 7.95%. By the end of 2024, the debt to cash flow ratio is expected to decrease to less than 0.75x. Acquiring MOPL in consideration of assuming
'Mont D'Or is a foundational acquisition for Criterium and establishes our Company as a reputable operator in
'The restructured acquisition will solidify our balance sheet while providing us with the ability to execute our workover and drilling campaign, resulting in production growth and value creation for our shareholders all realized within free cash flow. The financing arrangements we announce today provide flexibility to execute our ambitious growth programs within MOPL and future acquisitions in the region. We have the experienced team needed to capture these opportunities and deliver significant value for our shareholders.'
Financing Details
The Company has entered into a letter of intent and the Company intends to enter into a loan agreement prior to the closing of the Acquisition (the 'Loan Agreement') in connection with the Convertible Loan pursuant to which the Strategic Investor will agree to advance
The Convertible Loan shall bear interest at a rate of 14.75% per annum from the date of issue, accrued daily and payable monthly in cash. The principal amount of the Convertible Loan shall be convertible, for no additional consideration, into Common Shares at the option of the holder at any time prior to the close of business on the third business day preceding the date that is 60 months from the date following the satisfaction or waiver of the Escrow Release Conditions (the 'Maturity Date') at a conversion price equal to
The Convertible Loan will be subordinated in right of payment of principal and interest to all senior obligations of the Company. The Convertible Loan will be secured by a general charge over the Company's assets. The outstanding principal amount of the Convertible Loan will be repaid in full on the Maturity Date in cash. On and following the date that is the second anniversary of the satisfaction of the Escrow Release Conditions, the Company shall have the right to partially or fully repay the outstanding principal amount of the Convertible Loan in cash at a premium of 14.75% to the outstanding principal amount at the time of repayment, plus any unpaid accrued interest, by giving 30-days written notice to the Strategic Investor.
The Company intends to use the net proceeds from the Financing for: (i) drilling activities in 2023/2024 to ramp up oil production focused on the Tungkal PSC; (ii) planning associated with the Tungkal PSC gas monetization tie-in project and (iii) repaying a portion of debt with certain MOPL's existing lenders in connection with the Acquisition in order to reduce the total debt.
The Company has granted the Strategic Investor an option, exercisable in whole or in part, at the sole discretion of the Strategic Investor, to increase the principal amount of the Convertible Loan by up to an additional 15% (the 'Convertible Loan Option'). In addition, the Company has granted the Underwriter an option, exercisable in whole or in part, at the sole discretion of the Underwriter to purchase from the Company up to an additional 15% of the Equity Subscription Receipts sold under the Public Offering, at any time, from time to time, for a period of 30 days from and including the closing of the Public Offering, on the same terms and conditions of the Public Offering to cover over-allotments, if any, and for market stabilization purposes in the Public Offering (the 'Over-Allotment Option').
Upon closing of the Public Offering, the net proceeds will be placed in escrow (the 'Escrowed Proceeds') with an escrow agent ('Escrow Agent') and will be released to the Company (together with the interest thereon) upon satisfaction of certain escrow release conditions ('Escrow Release Conditions') and the Underwriter receiving a certificate from the Company prior to the Termination Time (as defined below) to the effect that:
the completion, satisfaction or waiver of all conditions precedent to the Acquisition in accordance with the SPA (save and except for those conditions precedent which are contingent upon and/or will be completed, satisfied or waived concurrent with or as part of the closing of the Acquisition (the 'Concurrent Conditions Precedent'), provided that the Chief Executive Officer of the Company (or such other officers as may be acceptable to the Underwriter, acting reasonably) has certified to the Underwriter that, to the best of his information, knowledge or belief, no event, circumstance or condition exists which could reasonably be expected to result in any of the Concurrent Conditions Precedent not being completed, satisfied or waived concurrent with or as part of the closing of the Acquisition; it being understood and agreed that certain of the Concurrent Conditions Precedent may be completed or satisfied pursuant to the giving and acceptance of solicitors' undertakings, as applicable, to the satisfaction of the Underwriter, acting reasonably;
the receipt of all required shareholder and regulatory approvals, including, without limitation, the conditional approval of the TSXV for the Acquisition; the Strategic Investor having completed due diligence on the Company, in its sole discretion, and is satisfactory; the Company obtaining shareholder approval for the Strategic Investor to become a 'control person' of the Company; the issuance of the Convertible Loan and the Loan Warrants on before the closing of the Acquisition; the representations and warranties of the Company contained in the underwriting agreement to be entered into in connection with the Public Offering being true and accurate in all material respects, as if made on and as of the escrow release date and the Company and the Underwriter having delivered a joint notice and direction to the Escrow Agent, confirming that the conditions set forth in (a) to (f) above have been met or waived.
If (i) the Escrow Release Conditions are not satisfied or waived on or prior to
The Public Offering is expected to close on or about the week of
The Convertible Loan and Warrants issuable pursuant to the Convertible Loan will be subject to a statutory hold period lasting four months and one day following the closing of the Convertible Loan pursuant to Canadian securities laws. The Equity Subscription Receipts will be offered by way of a short form prospectus to be filed in each of the provinces of
This news release does not constitute an offer to sell or a solicitation of an offer to buy any of securities in
Overview of the Tungkal PSC
MOPL holds a 100% working interest in the Tungkal PSC which covers an area of 2,285 km2 and contains the Mengoepeh and Pematang Lantih oil fields that collectively produce 1,030 bbl/d and contain 4.6 MMbbl 2P Reserves as of
Mengoepeh Field
There are 12 wells that produce 430 bbl/d1. As of
Pematang Lantih Field
There are 12 wells that produce 600 bbl/d1. As of
West Salawati PSC
MOPL holds a 100% operated working interest in the West Salawati PSC located onshore
Prospect Inventory
West Salawati contains mature prospects in both the onshore and offshore areas of the PSC. The BLL Cluster located onshore has well-pads prepared for drilling and, if successful, production can be handled at the BLL production facility which is located 1 km away and has fluid capacity in excess of 5,000 bpd. The offshore area of the PSC contains 15 prospects/leads and Criterium intends to conduct a detailed prospect and lead review and ranking in Q4 2023/Q1 2024.
About
Contact:
Email: info@criteriumenergy.com
Completion of the Transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and if applicable, disinterested shareholder approval. Where applicable, the Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of Criterium should be considered highly speculative.
Reserve report commissioned by MOPL and prepared by
EBITDA projections are based on 2P Reserve Report case for 2024 with management estimate for phased activity (Reserve report states
Common Shares issued to Tourmalet are in satisfaction of the fee payable by MOPL to Tourmalet for negotiating write-downs to current MOPL lenders and will be issued at the lower of the Equity Subscription Receipt issue price or the 10-day VWAP prior to closing. The Common Shares issued to the lenders in exchange for debt (
The contingency payments are calculated and paid semi-annually and are based on asset performance and commodity price, specifically (1) 'Oil Production' payment of
Based on the base case STOIIP contained in the Reserve Report.
Cautionary Note Regarding Forward-Looking Statements
This press release contains certain forward-looking information and statements that are based on expectations, estimates, projections and interpretations as at the date of this news release. The use of any of the words 'expect', 'anticipate', 'continue', 'estimate', 'may', 'will', 'project', 'should', 'believe', 'plans', 'intends', 'seek', 'aims' and similar expressions are intended to identify forward-looking information or statements.
This press release contains statements of forward-looking information including, without limitation, statements with respect to completion of the Financing, the issuance of the Convertible Loan, price of the Equity Subscription Receipts, dates for closing of the Financing and issuance of the Convertible Loan, amount of proceeds under the Financing and the Convertible Loan, approval of the Financing and the Convertible Loan by regulatory authorities, intended use of net proceeds of the Financing and the Convertible Loan, generation of stated net operating income by the Company for the second half of 2023, the stated significant upsize potential of the MOPL assets, the intention to drill 3-4 wells in Q4 2023 and commence an annual drilling program in 2024 in the Mengoepeh Field, the increase of recovery from simple faulted anticline structures through converting former producing wells into water injectors, the implementation of a workover in Q4 2023 by Criterium in the BLL-A Field, the satisfaction of conditions precedent to the Acquisition and approval by all regulatory authorities of the Acquisition.
Factors that could cause actual results to vary from forward-looking statements or may affect the operations, performance, development and results of Criterium's businesses include, among other things: risks and assumptions associated with operations; risks inherent in Criterium's future operations; increases in maintenance, operating or financing costs; the availability and price of labour, equipment and materials; competitive factors, including competition from third parties in the areas in which Criterium intends to operate, pricing pressures and supply and demand in the oil and gas industry; fluctuations in currency and interest rates; inflation; risks of war, hostilities, civil insurrection, pandemics (including COVID-19), instability and political and economic conditions in or affecting
With respect to forward-looking statements contained in this press release, Criterium has made assumptions regarding, among other things: the COVID-19 pandemic and the duration and impact thereof; future exchange and interest rates; supply of and demand for commodities; inflation; the availability of capital on satisfactory terms; the availability and price of labour and materials; the impact of increasing competition; conditions in general economic and financial markets; access to capital; the receipt and timing of regulatory and other required approvals; the ability of Criterium to implement its business strategies; the continuance of existing and proposed tax regimes and effects of regulation by governmental agencies.
The forward-looking statements contained in this press release are made as of the date hereof and the parties do not undertake any obligation to update 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.
Oil and Gas Advisories
Total proved, probable and possible reserves disclosed in this announcement in respect of the Tungkal PSC are based on the Reserve Report commissioned by MOPL and prepared by
The Resource Report describes reserves as '...estimated remaining quantities of commercially recoverable oil, natural gas, and related substances anticipated to be recoverable from known accumulations, as of a given date, based on the analysis of drilling, geological, geophysical, and engineering data, the use of established technology, and specified economic conditions, which are generally accepted as being reasonable.'
These reserves are further classified based on the level of certainty and status of development or production.
The Reserve Report classifies levels of uncertainty in accordance with the Canadian Oil and Gas Evaluation Handbook. These levels are described as PDP, PD, 1P, 2PD, 2P and 3P levels of status and uncertainty (see glossary for summarized definitions). According to the Reserve Report, estimates and uncertainty are further influenced by: (1) a variety of market factors which may influence the commerciality of resource recovery and (2) the Reserve Report is based on estimates only and there is no guarantee of actual recovery.
Any references in this presentation to initial production rates are useful in confirming the presence of hydrocarbons, however, such rates are not determinative of the rates at which such wells will continue production and decline thereafter. While encouraging, readers are cautioned not to place reliance on such rates in calculating the aggregate production for Criterium. Management of Criterium believes the information may be relevant to help determine the expected results that Criterium may achieve within oil and gas interests and such information has been presented to help demonstrate the basis for Criterium's business plans and strategies with respect to the Tungkal PSC. There is no certainty that the results of the analogous information or inferred thereby will be achieved by Criterium and such information should not be construed as an estimate of future production levels, reserves or the actual characteristics and quality of Criterium's assets.
BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 5.6 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. As the value ratio between natural gas and crude oil based on the current prices of natural gas and crude oil is significantly different from the energy equivalency of 5.6:1, utilizing a conversion on a 5.6:1 basis may be misleading as an indication of value.
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