Razor Energy Corp. Announces Closing of Previously Announced Strategic Light Oil Asset Acquisition and Updated 2017 Corporate Budget and Guidance
Razor Energy Corp. ("Razor" or the "Company") (TSX VENTURE:RZE) (www.razor-energy.com) is pleased to announce the closing of the previously announced strategic acquisition of light oil assets located in west central Alberta (the "Assets") for cash consideration of $9.6 million, subject to customary adjustments (the "Acquisition"). The Assets, situated within Razor's core area, are characterized by low decline, light oil focused production, which is primarily operated with abundant infrastructure to complement Razor's existing asset portfolio.
The purchase price for the Acquisition was $9.6 million, prior to closing adjustments (the "Purchase Price"). The Purchase Price was funded through a prospectus financing (the "Offering") through a syndicate of agents co-led by Haywood Securities Inc. and Jett Capital Advisors, LLC, together with Canaccord Genuity Corp., Eight Capital, National Bank Financial Inc., Acumen Capital Finance Partners Limited and Macquarie Capital Markets Canada Ltd. (collectively, the "Agents") of 5,750,000 subscription receipts of the Company ("Subscription Receipts") at a price of $3.00 per Subscription Receipt for aggregate gross proceeds of $17.25 million, including the full exercise of the Agents' over-allotment option, which closed on May 15, 2017.
In accordance with their terms, each Subscription Receipt was exchanged for one common share of the Company ("Common Share") and one-half of one Common Share purchase warrant ("Warrant") upon closing of the Acquisition and the aggregate gross proceeds of the Offering were released from escrow. Holders of Subscription Receipts are not required to take any action in order to receive the Common Shares and Warrants to which they are entitled.
The Acquisition is complementary on a geographic, geological and operational basis and in terms of product mix with Razor's current assets and operations in the Swan Hills areas. On a pro forma basis, using February 2017 field estimated production, the Company anticipates production at or above 3,700 boe/d, of which 85% is light oil and natural gas liquids.
The Acquisition enhances Razor's existing asset base with similar reactivation and re-entry opportunities, in addition to future drilling upside with proven deliverability of light oil from the Montney formation. The primary fields within the Assets include Kaybob South Triassic Units No. 1 and 2, Kaybob Beaverhill Lake Unit No. 1 and Simonette/Karr Beaverhill Lake Oil Pools.
With 95,679 (33,542 net) acres of land, the majority held by production, Razor foresees ample drilling opportunities comprised of both vertical and horizontal wells. Management has currently identified over 15 net drilling locations including the potential for future horizontal targets. The development of these properties is expected to be part of the 2018 capital program.
2017 CAPITAL BUDGET AND REVISED GUIDANCE
Given the volatility in commodity prices and Razor's ability to grow production through high frequency / low capital intensive projects, Razor expects to take a disciplined and conservative approach to the 2017 budget. The capital budget will be reviewed continuously by management and the board of directors of the Company (the "Board") for changes in commodity price assumptions and project economics. Razor remains steadfast in its conviction to maintain its financial advantage and build a top-tier junior oil and gas company.
For fiscal 2017, the capital expenditure budget of $13.0 million, which was approved by the Board prior to the Acquisition, remains unchanged. Razor continues to invest in a combination of reactivations, re-entries, optimization activities and waterflood management. These initiatives will be split between Swan Hills and Kaybob areas at management's discretion. In addition, the budget addresses the Alberta Energy Regulator's requirement under the Inactive Well Compliance Program including end of life well and facility spending.
With innovative focus and disciplined capital deployment in its Swan Hills and Kaybob areas, the Company is well positioned to execute on its growth strategy while maintaining financial flexibility.
Razor plans to continue to pursue value-driven acquisitions with a view towards consolidation of land and production within the Company's existing project areas in addition to complementary shallow, light oil horizons within its Alberta core region. Razor remains focused on adding to its inventory of high quality projects to sustain longer-term growth.
Razor Energy Corp. is a light oil focused company operating predominantly in Alberta. Razor's full-cycle business plan provides an opportunity to reposition the Company as a disciplined and high-growth junior E&P company. With an experienced management team and a strong, committed Board, growth is anticipated to occur through timely strategic acquisitions and operations. Razor currently trades on TSX Venture Exchange under the ticker "RZE".
SOURCE: Razor Energy Corp.
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