CALGARY – The developer behind the Goldboro liquefied natural gas project on the East Coast is planning a reverse takeover of a Quebec oil and gas exploration firm to expand financing options ahead of a development deadline.
Calgary-based Pieridae Energy Ltd. said Monday it’s combining with Petrolia Inc. (TSX-V:PEA) to have both a more integrated supply of natural gas, and to allow it to tap into both private and public sources of financing, as it looks to make a final investment decision on the multibillion-dollar Goldboro project by the end of the year.
Under the terms of the deal, Pieridae has committed to raise $50 million through subscription receipts before the deal closes, with Petrolia expected to end up with 14.75 per cent of the combined company.
Pieridae CEO Alfred Sorensen said the deal will help it raise money in a challenging environment as it looks to secure the $5.5 billion needed for one export unit and $7.5 billion for two at the LNG project in Goldboro, Nova Scotia.
The company already has an offtake agreement with Germany-based energy company Uniper, formerly part of E.ON, for half of the up to 10 million tonnes year of LNG exports, and continues to look at partners for the second half.
Sorensen said the agreement with the German utility allows it to borrow debt at a much lower rate. However, they need to start construction by the end of the year or early next year to have enough time to finish and to start supplying the utility by the end of 2021 as part of the offtake deal.
“It all very much revolves around the German offtake and loan guarantee, which kind of makes us more credible when it comes to getting to the finish line,” said Sorensen.
“There’s no doubt that Pieridae is punching way above its weight class.”
He said the company plans to rely on debt for about 75 per cent of the project and equity for the rest, with the debt portion expected to take about six to eight months to put in place.