CALGARY, ALBERTA–(Marketwired – July 11, 2016) – Petrocapita Income Trust (CSE:PCE.UN) (“Petrocapita” or the “Trust“) announces that it has closed a Purchase and Sale Agreement (“PSA“), approved by Order of the Court of Queen’s Bench of Alberta on July 11, 2016 for all, or substantially all, of the assets of Palliser Oil and Gas Corporation (“Palliser“) from its Receiver Manager, FTI Consulting Canada Inc. (“FTI“) for $3,000,000.00 (plus or minus any adjustments pursuant to the PSA post-closing) and a Gross Overriding Royalty of 1.5% on the assets acquired in favor of Palliser’s lender effective for a period of five (5) years from closing and in respect of any calendar month when the average daily selling price for the near month light, sweet crude oil future contracts as reported by the New York Mercantile Exchange in US dollars for West Texas Intermediate oil exceeds $80.00 USD per barrel. The effective date of the transaction is May 01, 2016. Details of the transaction may be found on the website for FTI (http://cfcanada.fticonsulting.com/Palliser).
About the Transaction
For the 4 months preceding the effective date, production from the Palliser assets averaged 342 BOEPD. Average daily production from the same assets for 2013, prior to receivership, averaged 2,340 BOEPD.
The acquisition of the Palliser assets results in increasing the Trust’s number of wells from 155 gross (147.4 net) to 521 gross (429.7 net). It also increases its operating and approved produced water disposal wells from 9 to 30, its associated produced water disposal facilities from 9 to 19, its multi-well oil batteries from 4 to 9, its custom treating facilities from 1 to 3, its pipelines from approximately 0.50 km to 72.51 km, and its natural gas compressor facilities from 0 to 2. Additionally, it increases its mineral land position from 10,165 gross acres (9,859 net) to 102,868 gross acres (68,643 net) and its proprietary seismic data base from 0 to 237 km of 2D and 10.3 square km of 3D.
Based on the reserve report prepared by third party evaluators of both the Trust and Palliser as at December 31, 2015, proved plus probable reserves increase from 4.1 million barrels with an NPV10 value of $50.3 million to 10.0 million barrels with an NPV10 value of $87 million. In separate valuations prepared by the same evaluators and not included in the reserve valuations, the NPV10 value of facilities increases from $52.2 million to $67.8 million.
Finally, as a result of acquiring all, or substantially all, of the assets of Palliser, and filing of joint elections under Section 66.7 of the Income Tax Act (Canada) and Sub Section 167(1) of the GST Legislation, the Trust, or its subsidiaries shall acquire the cumulative resource expenses of Palliser to the extent permitted under the Act and limit payment of the GST on the Tangible portion of the assets acquired.
Details related to the Trust’s reserves and facilities valuations and secured convertible debenture closings to date related to the acquisition and development capital have been filed with the Canadian Securities Exchange (www.theCSE.com).
A copy of the 2015 Update outlining the Trust’s activities and development plans, along with details of the acquisitions, have been posted on the Trust’s website (www.Petrocapita.com).
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 subsidiary, Petrocapita Oil and Gas L.P. It owns and operates 521 gross (429.7 net) oil wells, 19 produced water disposal facilities, 3 custom oil processing facilities, oil well service rigs, fluid haul trailers, motor graders and well site processing equipment. It is seeking accretive opportunities to acquire both oil production and complimentary midstream assets during a cyclical low in the oil markets.