Manitok Energy Inc. ("Manitok") (TSX VENTURE:MEI) and Craft Oil Ltd. ("Craft") are pleased to announce that Manitok and Craft have entered into an arrangement agreement dated as of April 28, 2017 (the "Arrangement Agreement"). Under the terms of the Arrangement Agreement, Manitok will acquire all of the issued and outstanding common shares of Craft ("Craft Shares") by way of a plan of arrangement under the Business Corporations Act (Alberta) (the "Arrangement") for $6.6 million of common shares of Manitok ("Manitok Shares") at the Manitok Share Price (defined below). Craft's assets include approximately $3.5 million of net working capital (includes about $3.0 million of cash), 430 boe/d (about 30% oil and liquids) of production and approximately 62,000 acres of gross total land (48,000 net) and 31,000 acres of gross undeveloped land (26,490 net) in the Peace River Arch area of Alberta. Based on the reserves report prepared by McDaniel & Associate Consultants effective December 31, 2016, total proved reserves of Craft are about 1.3 million boe (about 30% oil and liquids), after giving effect to certain dispositions of assets completed by Craft in 2017. Craft has no debt. Craft's assets are complimentary to Manitok's existing assets in the Peace River Arch area of Alberta. When combined following the completion of the Arrangement, Manitok's total production in the Peace River Arch area will be approximately 675 boe/d.
Craft also has approximately $33 million in total tax pools, including approximately $17 million in non-capital losses.
Pursuant to the Arrangement, each Craft shareholder will receive, for each Craft Share, such number of Manitok Shares that is obtained by dividing $6.6 million by the Manitok Share Price (as defined below) and dividing that number by the total issued and outstanding Craft Shares and the number of Craft Shares that would be issued on the cashless exercise of all "in-the-money" options and performance warrants of Craft.
The "Manitok Share Price" will be such price as is as mutually agreed between the parties prior to 5 trading days preceding the date that is 5 calendar days preceding the meeting of Craft shareholders to be convened to approve the Arrangement (the "Craft Meeting Date"), or in the event that the parties cannot come to a mutual agreement, the volume weighted average trading price of Manitok Shares on the TSX Venture Exchange ("TSX-V"), calculated by using 5 trading days preceding the date that is 5 calendar days preceding the Craft Meeting Date.
The Arrangement Agreement contains customary representations and warranties of each party, and non-solicitation and interim operations covenants. The Arrangement is subject to customary conditions for a transaction of this nature, which include court and regulatory approvals (including the approval of the TSX-V) and the approval of 66 2/3% of the votes cast by Craft shareholders represented in person or by proxy at a meeting of Craft shareholders to be called to consider the Arrangement. As part of the Arrangement, certain officers, directors and shareholders of Craft have entered into a share lock-up agreement for a total of approximately 14% of the total common shares outstanding for Craft. Both parties of the Arrangement have agreed to a mutual break fee of $250,000 subject to certain conditions. A special meeting of the shareholders of Craft to approve the Arrangement is anticipated to be held on or about June 5, 2017.
The Board of Directors of Craft has unanimously agreed to recommend the approval of the Arrangement.
A copy of the Arrangement Agreement will be available under each of Manitok's and Craft's SEDAR profile at www.sedar.com.
Craft is engaged in the exploration for, development of and production of oil and natural gas properties in Western Canada and is a reporting issuer in all provinces and territories of Canada. Craft common shares are not listed on any recognized exchange in Canada. Craft was incorporated under the Business Corporations Act (Alberta) and has its head office in Calgary, Alberta.
Manitok is a public oil and gas exploration and development company focused on Lithic Glauconitic light oil in southeast Alberta and Cardium light oil in west central Alberta. The Corporation utilizes its expertise, combined with the latest recovery techniques, to develop the remaining oil and liquids-rich natural gas pools in its core areas of the Western Canadian Sedimentary Basin.
SOURCE: Manitok Energy Inc.
The Toronto Stock Exchange has neither approved nor disapproved the information contained herein.