Leucrotta Exploration Inc. Announces a Strategic Montney Land Acquisition and a $50 Million Bought Deal Financing
Leucrotta Exploration Inc. ("Leucrotta" or the "Company") (TSX VENTURE:LXE) is pleased to announce that it has entered into agreements with public Alberta based oil and gas companies to acquire 18.5 net sections of land located within Leucrotta's higher confidence mapping area(1) encompassing 116 gross (105 net) sections of the Lower Montney Turbidite Light Oil Resource Play (the "Lands") (see detailed Press Release dated April 4, 2017) for $36 million (the "Acquisition"). The Lands are comprised of 18 sections of 100% working interest Crown lands and one 50% working interest section (Leucrotta currently being the other 50% working interest partner). The Lands increase Leucrotta's gross acreage land base within Leucrotta's higher confidence mapping area(1) by approximately 18%.
The Lands are adjacent and intertwined with Leucrotta's lands and gathering system and are offsetting or in immediate vicinity of several significant Lower and Upper Montney wells, including Leucrotta's recently announced 8-22 Lower Montney Turbidite Light Oil well as well as Leucrotta's original Doe development block that has been drilled for both liquids-rich gas in the Upper and Lower Montney.
Leucrotta's Lower Montney Light Oil wells, using type-well curve data used by GLJ Petroleum Consultants Ltd. ("GLJ") in preparing the GLJ's reserves report in respect of the Company's reserves effective as at December 31, 2016, have an average recovery of 669 mboes and generate an average NPV10 (as defined under "Oil and Gas Metrics" under "Reader Advisories and Forward-Looking Information") of $7.1 million using GLJs January 2017 price forecast.(2) In addition, based on the aforementioned GLJ type-well curve data and GLJ's January 2017 price forecast, Leucrotta's Lower Montney Liquids-rich Gas wells have an average recovery of 1,055 mboes and an average NPV10 of $8.7 million.
Leucrotta has mapped 16 of the 18.5 sections in the Light Oil window and 2.5 sections in the liquids-rich gas window. This represents a possible increase in drilling inventory of 128 Lower Montney Light Oil Wells and 10 Lower Montney Liquids-rich Gas Wells using 8 wells per section for oil and 4 wells per section for gas. The Acquisition will increase Leucrotta's total Lower Montney Oil drilling locations to 768 (20% increase) and Lower Montney Liquids-rich Gas locations to 110 (10% increase).
The Acquisition will be funded with a portion of the proceeds of a $50 million bought deal equity financing (the "Financing") co-led by Haywood Securities Inc. and National Bank Financial Inc., details of which are provided below under the heading "Bought Deal Financing" in this press release.
ACQUISITION OVERVIEW & STRATEGIC RATIONALE
Leucrotta has signed definitive agreements to acquire 18.5 net sections of Montney Land in its Doe/Mica Core area for a total purchase price of $36 million. The Lands have the following characteristics and/or anticipated benefits to the Company:
BOUGHT DEAL FINANCING
In connection with the Acquisition, Leucrotta has entered into an agreement with a syndicate of underwriters, co-led by Haywood Securities Inc. and National Bank Financial Inc. (collectively, the "Underwriters"), pursuant to which the Underwriters have agreed to purchase for resale to the public, on a bought deal basis: (i) 20,000,000 common shares of the Company ("Common Shares") at a price of $2.25 per Common Share for gross proceeds from the offering of Common Shares of $45 million (the "Common Share Financing"); and (ii) 1,852,000 Common Shares to be issued on a flow-through basis in respect of Canadian Exploration Expenses ("CEE") (the "Flow-Through Shares") under the Income Tax Act (Canada) at a price of $2.70 per Flow-Through Share for gross proceeds from the offering of Flow-Through Shares of approximately $5 million (the "Flow-Through Share Financing"). The aggregate gross proceeds from the Common Share Financing and Flow-Through Share Financing will be approximately $50 million (the "Financing").
The Company shall, pursuant to the provisions of the Income Tax Act (Canada), incur eligible CEE (the "Qualifying Expenditures") after the closing of the Financing and prior to December 31, 2018 in the aggregate amount of not less than the total amount of the gross proceeds raised from the issue and sale of the Flow-Through Shares. The Company shall renounce the Qualifying Expenditures so incurred to the purchasers of the Flow-Through Shares effective on or prior to December 31, 2017.
The Common Shares and Flow-Through Shares to be issued under the Financing will be distributed by way of a short form prospectus in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario and New Brunswick. A portion of the Common Share Financing may be conducted on a private placement basis in the United States via Rule 144A to Qualified Institutional Buyers only under the U.S. Securities Act of 1933, as amended and certain other jurisdictions outside of Canada as the Company and the Underwriters may agree on a private placement basis. No prospectus will be required to be filed in any jurisdiction other than the Canadian jurisdictions.
Completion of the Acquisition and the Financing are subject to certain conditions including the receipt of all necessary regulatory approvals, including the approval of the TSX Venture Exchange and the securities regulatory authorities, as applicable. The Financing is expected to close on or about April 26, 2017 or such other date as agreed upon between Leucrotta and the Underwriters, but in any event no later than May 15, 2017. The Acquisition is expected to close on or about May 31, 2017.
National Bank Financial Inc. acted as strategic advisor to Leucrotta with respect to the Acquisition.
ABOUT LEUCROTTA EXPLORATION INC.
Leucrotta Exploration Inc. is a Montney focused producer with lands located in the Dawson-Sunrise area in northeast British Columbia. Leucrotta's current acreage in the area is approximately 100,500 gross (90,200 net) acres or approximately 157 gross (141 net) sections of Montney land. Current production is approximately 3,000 boe/d (25% oil & NGLs). Leucrotta's shares are listed on the TSX Venture Exchange under the symbol "LXE".
SOURCE: Leucrotta Exploration Inc.
The Toronto Stock Exchange has neither approved nor disapproved the information contained herein.