ROK Resources Inc. (TSXV:ROK)(TSXV:ROK.WT) (the 'Company' or 'ROK') is pleased to announce it has entered into separate Asset Purchase and Sale Agreements (the 'Dispositions') to divest of certain non-core assets in Saskatchewan for total combined proceeds of approximately $47.25 million, which includes the sale of ROK's non-operated 2.11685% interest in the Weyburn Unit (the 'Weyburn Unit') to Rife Resources Ltd. ('Rife Resources') for total proceeds of approximately $44.5 million, before normal closing adjustments (the 'Transaction').
Two smaller dispositions (the 'Other Assets') make up the balance of the Dispositions with total proceeds of $2.75 million, before normal closing adjustments.
Weyburn Unit
The Transaction, by way of definitive sale agreement executed March 22, 2023, will result in gross proceeds that represent 35% of ROK's enterprise value prior to the Transaction, while the divestiture of 450 boe/d accounts for 11% of its corporate production and 21% of its 2022 net operating income.
Notably, at the time of the asset acquisition, as described in the press release dated March 7, 2022 ('FCL Acquisition'), the Weyburn Unit represented 15% of the total production and 28% of annualized net operating income that was acquired, but the gross proceeds from the Transaction represent 77% of the total purchase price of $58.0 million, net of closing adjustments, of the FCL Acquisition.
Strategic Rationale
Consistent with ROK's previously announced strategy, the Transaction divests significant non-core, non-operated assets, and will allow the Company to focus on its core properties, which provide significant growth potential via 172 undrilled locations. The $44.5 million in cash proceeds from the Weyburn Unit, before normal closing adjustments, will be accretive to existing shareholders of the Company by immediately eliminating 90% of ROK's outstanding senior term debt which will result in interest savings of $5.8 million. By June 2023, the Company's senior term debt is expected to be paid off entirely, providing the Company with incremental cashflow of $2.5 million per month, that can be deployed into organic drilling in its core Southeast Saskatchewan and Kaybob assets.
We are very proud of what the ROK team has accomplished in the last twelve months. After closing the FCL Acquisition with 3,000 boe/d and $46 million net debt, to currently producing greater than 3,750 boe/d with $15 million of net debt (at closing of the Dispositions), we are well positioned to execute a robust development plan through the second half of 2023. We look forward to offering full 2023 guidance at closing', said Cam Taylor, Chief Executive Officer and Chairman.
Other Assets
The Other Assets include: (i) 5,000 net acres of fee title land in Southwest Saskatchewan, and (ii) 40 boe/d of non-core production, for total proceeds of $2.75 million. The proceeds will be as allocated to working capital for the Company's upcoming 2023 drilling program, details of which are to come in a subsequent press release. The closing of the disposition of the Other Assets is subject to customary conditions and expected to occur within the coming days.
Capital Efficiency Update
Management's expertise in the sector, specifically growing companies through the drill bit, combined with in-depth knowledge of their existing asset base, has allowed ROK to complete an efficient drilling and recompletion program since the FCL Acquisition. In 2022, the Company added greater than 1,100 boe/d of production, to replace its 22% base decline, and exited the year with production in excess of 3,500 boe/d. The 2022 drilling and recompletion program was primarily focused on developing existing light oil pools and extending play areas to add new drilling inventory.
About
ROK is primarily engaged in exploring for petroleum and natural gas development activities in Saskatchewan and Alberta. It has offices located in both Regina, Saskatchewan, Canada and Calgary, Alberta, Canada. ROK's common shares are traded on the TSX Venture Exchange under the trading symbol 'ROK'.
Contact:
Tel: (306) 522-0011
Email: investor@rokresources.ca
Boe Disclosure
The term barrels of oil equivalent ('boe') may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet per barrel (6 Mcf/bbl) of natural gas to barrels of oil equivalence is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. All boe conversions in the report are derived from converting gas to oil in the ratio mix of six thousand cubic feet of gas to one barrel of oil.
Reserve Disclosure
All reserves information in this press release was prepared by an independent reserve evaluator, effective December 31, 2022 using the reserve evaluators December 31, 2022 forecast prices and costs in accordance with National Instrument 51-101 - Standards of Disclosure of Oil and Gas Activities ('NI 51-101') and the Canadian Oil and Gas Evaluation Handbook (the 'COGE Handbook'). All reserve references in this press release are 'Company gross reserves'. Company gross reserves are the Company's total working interest reserves before the deduction of any royalties payable by the Company and before the consideration of the Company's royalty interests. It should not be assumed that the present worth of estimated future cash flow of net revenue presented herein represents the fair market value of the reserves. There is no assurance that the forecast prices and costs assumptions will be attained, and variances could be material. The recovery and reserve estimates of ROK's crude oil, NGLs and natural gas reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual crude oil, natural gas and NGLs reserves may be greater than or less than the estimates provided herein.
ROK RESOURCES INC. 
