CALGARY, AB–(Marketwired – April 10, 2017) – Point Loma Resources Ltd. (TSX VENTURE: PLX) (the “Corporation” or “Point Loma“) is pleased to announce the signing of a binding term sheet to enter into a disposition (“Disposition”) and joint venture (“JV”) with Transerv Energy Ltd. (ASX: TSV) via its Canadian subsidiary Salt Bush Energy Ltd. (“Salt Bush”). Highlights of the transaction are summarized below:
Point Loma Salt Bush Joint Venture
- The Disposition consists of Point Loma selling and assigning a 20 percent working interest in its assets to Salt Bush for consideration of $5 million and the creation of a strategic JV;
- Salt Bush will pay Point Loma $1.5 million by April 17, 2017 and will pay the remaining balance of $3.5 million upon closing of the Disposition;
- Following closing Point Loma and Salt Bush will proceed forward on the basis of a working interest relationship of 80 percent Point Loma and 20 percent Salt Bush;
- The initial consideration of $5 million will be allocated to agreed upon operations that Point Loma will undertake on behalf of the JV after which all future capital will be funded directly by each party in the JV;
- Use of funds will include drilling, facility improvements to reactivate production and certain producing property acquisitions;
- The initial capital expenditures are expected to result in appreciation in Point Loma production and associated net revenues;
- Under the JV agreement, Salt Bush will contribute a proportionate share of Point Loma general and administrative expenses; and
- Point Loma and Salt Bush will become strategic partners in further ventures.
In establishing this JV Point Loma has attracted a strategic partner that will allow Point Loma to accelerate currently identified opportunities and additional capital options to pursue opportunities in the core focus area of west central Alberta. Point Loma has been able to acquire certain assets for accretive terms in the region and this transaction will inject capital to activate additional acquired production previously suspended and to expand the Corporation’s drilling program.
Closing of the JV transaction is anticipated prior to June 9, 2017 and is subject to a number of closing conditions, including satisfying due diligence review, regulatory approvals and completion of definitive agreements.
Current production of approximately 900 boe/d is anticipated to ultimately increase with the deployment of the proceeds through certain identified acquisitions, development drilling and new pool drilling opportunities.
Point Loma is pleased to establish this relationship with the Transerv group that was instrumental in the initial stages of Point Loma’s predecessor companies. This will add strength to our capital support and the potential to seek opportunities that may previously have gone untapped.
About Point Loma
Point Loma is a public oil and gas development and exploration company focused on horizontally exploiting conventional oil and gas reservoirs in west central Alberta. Point Loma’s business plan is to utilize its experience to drill, develop and acquire accretive assets with potential for horizontal multi-stage frac technology and exploit opportunities for secondary recovery. For more information and our current presentation please visit Point Loma’s website at www.pointloma.ca or Point Loma’s profile on the System for Electronic Document Analysis and Retrieval website at www.sedar.com.