CALGARY, ALBERTA–(Marketwired – Feb. 8, 2017) –
NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES WIRE SERVICES
Petrocapita Income Trust (CSE:PCE.UN)(CSE:PCE.UN.CN) (the “Trust“) announces that it is proceeding with its offering of up to $20,000,000 of series 1 preferred trust units of the Trust (“Preferred Units“) by way of an exempt market offering (the “Offering“). The Offering consists of a tied offering of Preferred Units of the Trust and Class A shares (“Shares“) of Petrocapita Energy Corp., a subsidiary of the Trust (the Trust and its subsidiaries, collectively “Petrocapita“). The Trust has entered into arrangements with registered dealers to effect sales of the securities on a best efforts basis.
Each Preferred Unit is priced at $1.00 and each Share is priced at $0.001. Each Preferred Unit is entitled to an annual distribution of $0.09 payable quarterly in arrears, is redeemable by the holder without reduction or penalty for $1.00 plus accrued distributions from and after the 4th year anniversary of issuance, and is retractable by the Trust. Each Share is exchangeable for 32 of the publically traded common units of the Trust (CSE:PCE.UN)(CSE:PCE.UN.CN) at any time after 18 months from the date of issuance of the Shares or on the occurrence of certain events, subject to certain restrictions, conditions and adjustments in certain circumstances.
The Offering is being made by way of private placement only to eligible investors in Canada and closings will occur from time to time at the discretion of the Trust.
Petrocapita intends to use the net proceeds from the Offering principally to acquire and develop oil and gas properties and related infrastructure assets, or interests therein, in the Lloydminster and surrounding area of Alberta and Saskatchewan. It is anticipated that a majority of the assets to be acquired will be in respect of heavy oil properties and related or ancillary infrastructure assets, which are expected to include produced water disposal facilities, produced water flow-lines, fuel gas flow-lines, fluid transportation equipment and facilities, drilling and well servicing equipment, and centralized oil processing facilities.
Petrocapita is actively pursuing such asset acquisitions and has currently identified a number of potential transactions which are now under evaluation and negotiation. The nature of the assets subject to these transactions include:
- producing as well as shut-in heavy oil wells – current aggregate production of approximately 200 bbls/d with up to an approximate 370 bbls/d shut-in;
- interest in a water disposal facility and ancillary infrastructure;
- fluid transportation equipment with third party contracts increasing capacity approximately 300%;
- well servicing rigs and equipment with third party contracts increasing capacity approximately 250%.
None of these transactions have yet reached the stage of entering binding definitive transaction agreements and so there is no certainty as to the completion of any of these transactions. However, it is anticipated that:
- if all transactions for the acquisition of heavy oil wells, both producing and shut-in, and the disposal facilities were to complete, the capital outlay would be approximately $6.85 million (inclusive of an estimated $0.6 million in capital expenditures to bring on shut-in production). In addition there would be future abandonment and reclamation obligations associated with these assets of approximately $3.5 million.
- if all transactions for the acquisition of the above assets, other than the heavy oil wells and the disposal facilities, were to complete, the aggregate acquisition cost would be approximately $3.5 million.
In respect to funding the acquisition of these assets, Petrocapita intends to pursue funding up to as much as $5.55 million through vendor take back financing in the form of long-term debentures issued to the vendors. If any binding acquisition agreements are entered, Petrocapita would intend to pursue completion of closing in the first half of 2017.
The securities offered have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act“) or any U.S. state securities laws, and may not be offered or sold in the United States or to, or for the account or benefit of, United States persons absent registration or any applicable exemption from the registration requirements of the U.S. Securities Act and applicable U.S. state securities laws. This news release shall not constitute an offer to sell or the solicitation of an offer to buy securities in the United States, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.
Petrocapita Income Trust is a Specified Investment Flow Through trust developing and acquiring heavy oil production and infrastructure assets in the Lloydminster area of east central Alberta and west central Saskatchewan through its wholly owned subsidiaries, Petrocapita Oil and Gas LP and Petrocapita Processing LP. Petrocapita owns, operates and has interests in oil wells, gas wells, produced water disposal facilities, produced water disposal/injection wells, custom oil processing facilities, natural gas compressor stations, oilwell service rigs, fluid haul tractors and trailers, motor graders, oil field service trucks and wellsite processing and ancillary equipment. It is seeking accretive opportunities to acquire both oil production and complimentary midstream assets during a cyclical low in the oil and gas markets.