Pilot Energy Corp. is pleased to provide an update on the previously announced exclusive Swift Current asset acquisition and on the exclusive option to purchase proven shut-in gas assets in North-western Alberta. In conjunction with the subject asset purchase/option and further development thereof, Pilot is currently seeking a minimum of $750,000 and maximum of $2,000,000 of capital financing for Phase 1 of its acquisition and development program through the issuance of common and flow-through shares. Post-financing (maximum allotment) would result in Pilot having outstanding shares of 16,738,900 / 18,472,289 fully-diluted. Pilot’s projected 2015 annual cashflow is $1.26 MM based upon 140 net boed.
Discussions and presentations continue with several top-tier private equity firms in preparation for further capitalization of Pilot for additional future development of the assets.
Pilot Energy Corp. and Blaze Energy Ltd. have duly executed the Agreement of Purchase and Sale of the West Verlo and Illerbrun oil assets (the “assets”) comprising 2,320 gross acres (1,838 net acres) in the Swift Current area. The purchase consideration is $450,000 cash. The effective date of the transaction is October 1, 2014. The assets comprise of 20 barrels of oil per day (gross/net) currently generating net cashflow of $230,000 per year. Approximately 100 barrels per day (66 net) of suspended oil can be accessed immediately from one re-drilled oil well, resulting in an incremental net cashflow of $860,000 per year for a further net investment of $1.4 MM. The opportunity is a result of the detailed negotiations, and technical and strategic input from Pilot’s dedicated management team and advisors. Transaction metrics are $22,500 per flowing barrel, and $4.05 per barrel of proved producing reserves, and $0.85 per barrel of total proved reserves, significantly below historical and current Industry transaction metrics.
It is anticipated that concurrent with closing, operatorship of the assets will be assigned to an active joint venture partner whom currently holds joint interests in the assets and adjacent lands, and has proved to be a successful driller and operator in the immediate area. Pilot’s non-operated structure will minimize its general and administrative costs, allowing focus on seeking additional opportunities. Pilot’s investment and development of the assets is expected to yield a payout of less than two years and rates of return in excess of 80%. The high-quality nature of the assets will allow Pilot several economic options for near and long-term exit strategies, in addition to internally generated future financing options. A break-even analysis indicates the base assets can withstand a $50 per barrel price in comparison to existing market prices of over $80 per barrel.
North-western Alberta (Rainbow Lake)
Pilot Energy Corp. and SunOcean Energy Ltd. have duly executed an exclusive option agreement to acquire a fifty percent ( 50 %) working interest before December 31, 2014, plus a contingent option to acquire the remaining 50% working interest in a suspended gas project (the “project”) in North-western Alberta. The option agreement allows Pilot Energy Corp. to spend up to $475,000 to reactivate 6 suspended gas wells and a water disposal well to earn a 50% working interest in the project. The project is capable of immediately producing 500 Mcf/d (83 Boed) upon re-activation, and will provide $170,000 per year in net cashflow, resulting in a three (3) year payout on investment. The opportunity is a result of Pilot’s management negotiating exclusive 100% project capture, and developing a $1.00 per Mcf cost saving operation to bring the property back to economic status. Contingent upon successful reactivation of the wells, a further option allows Pilot to capture 100% working interest in the project assets for an additional $500,000. A large inventory of incremental low-risk projects with both oil and gas development exist on and adjacent to the assets. The vendor has an eight year history of production and cashflow from the assets. Pilot continues to seek an operator for the assets in alignment with its corporate strategy of a non-operated, high working-interest, low-overhead cost producer.
The Rainbow Lake gas assets are being developed to support supply to both short-term spot markets within Alberta, and long-term gas supply contracts in Saskatchewan. The future gas supply contracts anticipates increasing demand volumes of up to 50 MMcf/d under potential JV and contractual arrangements with several senior and junior world-class industrial end-users.
This document contains certain forward-looking statements relating but not limited to Pilot Energy Corp’s expectations, intentions, plans and beliefs. Forward looking statements and information are based on a number of factors and assumptions which have been used to develop such statements and information but which may prove to be incorrect. By its nature, forward-looking information necessarily involves numerous assumptions, inherent risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and various future events will not occur. Forward-looking information can often be identified by forward looking words such as “anticipate”, “believe”, “expect”, “goal”, “plan”, “intent”, “estimate”, “may” and “will” or similar words suggesting future outcomes or other expectations, beliefs, plans, objectives, assumptions, intentions or statements about future events or performance. Forward-looking information may include reserve and resource estimates, estimates of future production, costs of capital projects and timing of commencement of operations, and is based on current expectations that involve a number of business risks and uncertainties. Factors that could cause actual results to differ materially from any forward-looking statement include, but are not limited to: failure to establish estimated resources and reserves; the impact of increasing competition; the general stability of the economic and political environment in which the Corporation operates; the timely receipt of any required regulatory approvals; the ability of the Corporation to obtain qualified staff, equipment and services in a timely and cost efficient manner; the ability of the operator of the projects which the Corporation has an interest in to operate the field in a safe, efficient and effective manner; the ability of the Corporation to obtain financing on acceptable terms; field production rates and decline rates; the ability to replace and expand oil reserves through acquisition, development or exploration; the timing and costs of pipeline, storage and facility construction and expansion and the ability of the Corporation to secure adequate product transportation; future oil prices; currency, exchange and interest rates; inflation; the regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which the Corporation operates; and the ability of the Corporation to successfully market the oil it produces as well as other factors. Forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from expected results.
Shareholders and prospective investors should be aware that these statements are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those suggested by the forward-looking statements. Although the Corporation believes that the expectations reflected in such forward looking statements or information are reasonable, undue reliance should not be placed on forward looking statements because the Corporation can give no assurance that such expectations will prove to be correct. Readers are cautioned not to place undue reliance on forward-looking information. Pilot Energy Corp. undertakes no obligation to update publicly or otherwise revise any forward-looking information whether as a result of new information, future events or other such factors which affect this information, except as required by law.
For further information contact;
Mr. Edward C. Kozowy, Director, Pilot Energy Corp.
Phone: (306) 651-5192
Mr. Robert Theoret, Director, Pilot Energy Corp.