Pulse Oil completes first tranche of private placement, completes Mannville Acquisition and plans to start field work program to increase production

June 14, 2017 7:20 AM

CALGARY, June 14, 2017 /CNW/ – Pulse Oil Corp. (“Pulse” or the “Company“) (TSX-V: PUL) announces that it has closed the first tranche (the “First Tranche“) of its previously announced (May 3, 2017) private placement (the “Private Placement“) led by Mackie Research Capital Corporation as sole agent (the “Agent“). Pulse is also pleased to announce that it has closed its previously announced acquisition of certain oil and gas assets in the Queenstown area of the Province of Alberta (the “Mannville Acquisition“) and Pulse also has entered into a definitive agreement in respect of the purchase of certain Whiskey Creek light oil and gas assets (the “Whiskey Creek Assets“) as previously announced (May 3, 2017) (the “Whiskey Creek Acquisition“).

Prior to the closing of the First Tranche, Pulse provided the Agent with a release notice, indicating that all conditions, undertakings and other matters to be satisfied, completed in respect of the Mannville Acquisition had been satisfied, completed or otherwise met, other than the payment of the purchase price (the “Release Notice“). Upon the issuance of the Release Notice (with the Agent having waived all escrow release conditions in respect of the Whiskey Creek Acquisition), Pulse closed on aggregate gross proceeds of approximately $4,812,935 under the First Tranche of the Private Placement, consisting of a combination of Basic Units and Flow-Through Units (as each is defined below).

Pulse raised gross proceeds of $3,115,167 under the First Tranche of the Private Placement through the issuance of 25,959,724 units of the Company (the “Basic Units“) at a price of $0.12 per Basic Unit. Each Basic Unit was comprised of one common share of Pulse (a “Common Share“) and one Common Share purchase warrant (a “Warrant“). Each Warrant entitles the holder thereof to acquire one Common Share (a “Warrant Share“) at an exercise price of $0.17 per Common Share for a period of 24 months (June 13, 2019).

In addition to the Basic Units, Pulse also raised gross proceeds of $1,697,768 through the issuance of 13,059,760 units of the Company (the “Flow-Through Units“) at a price of $0.13 per Flow-Through Unit. Each Flow-Through Unit consisted of one Common Share issued on a flow -through basis pursuant to the Income Tax Act (Canada) (a “Flow-Through Share“) and one Warrant (also on the same terms and conditions as the Warrants issued pursuant to the Basic Units).

The securities issued by Pulse under the First Tranche are subject to a four month “hold period” expiring on October 14, 2017 (the “Hold Period“), as prescribed by applicable securities laws and regulations and policies of the TSX Venture Exchange.

As a result of the closing of the First Tranche and the completion of the Mannville Acquisition, Pulse now has 73,961,348 Common Shares, inclusive of 3 million shares issued as part of the Mannville Acquisition discussed in more detail below, as well as having 39,019,484 Warrants issued and outstanding.

“Our financing is proceeding positively with solid interest and support from a variety of investors who, we believe, recognize that it is an opportune time to start-up a high growth, new oil and gas business with a clean balance sheet at the bottom of an energy cycle. Our team feels this First Tranche of the Private Placement, which is Pulse’s first financing under the current management team, not only allows us to complete the strategic Mannville Acquisition, but also allows us to get to work re-starting shut-in production, and increasing cash flow as soon as possible” said Garth Johnson, Chief Executive Officer of Pulse. “We are now positioned to conduct our operational plan, move to close the second tranche of the Private Placement in the coming weeks and implement our plan to optimize the value of Pulse’s increasing asset base. We would also like to thank Mackie Research Capital Corp. for their significant efforts in this financing effort.”

Overview of Oil & gas Assets:

Pulse’s summary of key oil and gas asset details, assuming completion of the Whiskey Creek Acquisition, are as follows and are described on a BOE basis.

Property Description	Net Prod’n (BOE/Day)	Projected BOE/Day in 8-12 months	Proved (“1P”) ⁽⁴⁾	Proved & Probable (“2P”)⁽⁴⁾	Proved: NPV10 ⁽⁴⁾	Proved & Probable: NPV10 ⁽⁴⁾	Net Acreage
Mannville Assets	100	850	529,000 ⁽³⁾	1,031,000 ⁽³⁾	$1,171,000 ⁽³⁾	$5,524,000 ⁽³⁾	30,878
Whiskey Creek	85	350	269,000 ⁽²⁾	328,000 ⁽²⁾	$3,332,500 ⁽²⁾	$3,863,400 ⁽²⁾	43,424
Bigoray	35	250	464,000⁽¹⁾	695,000 ⁽¹⁾	$4,058,800 ⁽¹⁾	$6,161,800⁽¹⁾	7,276
Total	220	1,450	1,262,000	2,054,000	$8,562,300	$15,549,200	81,578

			(1)	Bigoray independent reserve evaluation completed by McDaniel & Associates Consultants Ltd. effective December 31, 2016.
			(2)	Whiskey Creek independent reserve evaluation completed by McDaniel & Associates Consultants Ltd. effective December 31, 2016.
			(3)	Mannville Assets independent reserve evaluation completed by Sproule Associates Limited effective February 28, 2017. Reserve estimates for each independent reserve evaluation report have been prepared by a qualified reserve evaluator in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities (“NI 51-101“). The total net present values (NPV10) presented in the above table are before tax and are based on different effective dates as noted and NPV10’s do not represent the fair market value of the reserves.
			(4)	NPV10’s use forecast pricing and costs based on the opinion of the independent reserve evaluator of the future crude oil, natural gas and natural gas product prices on the effective date of the reserve evaluation and escalate annually at a rate of 2% per year, in Canadian dollars. The forecast of commodity prices used in for Bigoray can be found at http://www.mcdan.com/priceforecast and for Mannville Assets at https://www.sproule.com/insights/sproule-price-forecasts/forecast-archive.

For a further breakdown of reserves, per property, please see the detailed table below.

MANNVILLE SA ASSETS:

The purchase price for the Mannville Acquisition from an arm’s-length, Alberta incorporated private company was $1.73 million after customary closing adjustments, paid as to approximately $1.37 million in cash and by the issuance of 3 million Common Shares at a deemed issue price of $0.12 per Common Share, equal to an aggregate deemed value of $360,000. The cash payment was made using a portion of the net proceeds from the First Tranche of the Private Placement.

As reflected in the above table, the assets acquired pursuant to the Mannville Acquisition include proved and probable reserves of 1,031,000 BOE (NPV10: $5,524,000) and approximately 100 BOE/D of current production within 30,878 net acres of land. The assets contain a minimum of 20 drill-ready horizontal Mannville locations identified within established oil pools.

Drew Cadenhead, Pulse President and COO commented, “This First Tranche of the Private Placement, along with our expected cash-flow from operations, will allow us to start drilling at our Mannville SA property. With 20 development infills already identified from extensive well control in the area and on 3-D seismic, we believe the low-risk nature of these producing assets, when combined with the upside potential of low-cost horizontal drilling operations, should allow Pulse to grow in strength and size quickly to create value for our shareholders.”

In addition to the large inventory of existing Mannville drilling locations, Pulse currently plans to utilize its 3D seismic data base to expand its horizontal drilling inventory in the Mannville, as well as further delineate identified opportunities in the Ellerslie, Pekisko/Shunda and Nisku formations.

BIGORAY ASSETS:

Proceeds from the First Tranche are also intended to be used to fund the re-activation program of shut-in, behind-pipe production at Pulse’s Bigoray property. As reflected in the above table, these assets consist of net proved and probable reserves of 695,000 BOE (NPV10: $6,161,800) and approximately 35 BOE/D of current production.

“Our Bigoray assets could provide immediate growth of production and cash flow for Pulse by re-starting shut-in production, and optimizing facilities while we continually build and develop operations, including preparation for the exciting EOR opportunity Bigoray provides Pulse.”, Cadenhead said. “We currently forecast production growth at Bigoray to reach 250 BOE/D, net to Pulse, simply by re-starting production that was shut-in 2-3 years ago. We estimate Bigoray, to be cash flow positive at these rates; so our expectation is that these assets will be strong economic performers at today’s commodity prices. We are excited to begin the initial planning and minor facility and well modifications that will be necessary to implement the enhanced oil recovery program at the Company’s Bigoray Nisku Pinnacle Reef assets at the appropriate time. This proven methodology of capturing more oil from existing proven reservoirs provides the opportunity to create significant value for our shareholders, without the risk of exploratory drilling.”

WHISKEY CREEK ASSETS:

Pulse also announces the signing of a definitive Purchase and Sale Agreement related to the planned acquisition of the Whiskey Creek Assets as previously announced (May 3, 2017) through the purchase of an arm’s-length Alberta incorporated private company. The Whiskey Creek Assets include light oil and gas assets, averaging approximately 60% working interest throughout the Red Earth area of Alberta, as well as sweet gas upside in the Whiskey Creek area of Southern Alberta. The Whiskey Creek Assets contain proved and probable reserves of 328,000 BOE (95% light-medium oil – NPV10 $3,863,400), and approximately 85 BOE/d of production. Pulse is enthusiastic about the possible upside associated with the Whiskey Creek Assets, including the opportunity for low risk uphole completions of bypassed pay in current wells, existing well re-activations, simple low-cost work-overs in dozens of existing wells, as well as infrastructure optimization to reduce costs, all contributing to Pulse’s current plan to increase production and cash-flow quickly and safely. The Whiskey Creek assets cover 43,424 net acres of land, offering Pulse the opportunity to further delineate and develop these assets for years to come, while current production and low-cost early stage production additions offer long-life reserves and steady production and cash-flow to fund future operations and/or opportunities.

The purchase price for the Whiskey Creek Assets is $1.2 million and is payable by the issuance of 10 million Common Shares at a deemed price of $0.12 per Common Share. Closing of the transaction is expected to take place in July 2017.

Related Party Participation in the First Tranche

Garth Johnson, Chief Executive Officer and director of Pulse, purchased 1,666,666 Basic Units for an aggregate purchase price of $200,000. As at the closing of the First Tranche, Garth Johnson beneficially owned or controlled 6,084,209 Shares and 1,666,666 Warrants, representing approximately 10.2% of the issued and outstanding Common Shares on an undiluted basis (assuming exercise of the purchased Warrants in full).

Drew Cadenhead, President, Chief Operating Officer and director of Pulse, purchased 833,334 Basic Units for an aggregate amount of $100,000. As at the closing of the First Tranche, Drew Cadenhead beneficially owned or controlled 5,646,710 Common Shares and 833,334 Warrants, representing approximately 8.7% of the issued and outstanding Common Shares on an undiluted basis (assuming exercise of the purchased Warrants in full).

Douglas Ellenor, Director of Pulse, purchased 165,000 Basic Units for an aggregate purchase price of $19,800. As at the closing of the First Tranche, Douglas Ellenor beneficially owned or controlled 365,083 Common Shares and 165,000 Warrants, representing approximately less than 1% of the issued and outstanding Common Shares on an undiluted basis (assuming exercise of the purchased Warrants in full).

Aaron Doyle, CFO of Pulse subscribed for 83,334 Basic Units having a price of $10,000. As at the closing of the First Tranche, Aaron Doyle owned or controlled 83,334 Common Shares and 83,334 Warrants representing less than 1% of the issued and outstanding Common Shares on an undiluted basis (assuming exercise of the purchased Warrants in full).

As insiders of Pulse participated in this private Placement, it is deemed to be a “related party transaction” as defined under Multilateral Instrument 61-101—Protection of Minority Security Holders in Special Transactions (“MI 61-101“). Each Common Share provides the holder with the right to one vote per Common Share. The Warrants do not entitle the holders to any voting rights. Therefore, all Warrants purchased under the Placement provide the subscriber, including the related parties, with no additional votes at present but the holders thereof will have one vote per Common Share when issued upon the exercise of the Warrants. The Private Placement was unanimously approved by the directors of the Company. Other than the subscription agreement between the aforementioned insiders and the Company relating to the issuance of the Basic Units under the Private Placement, the Company has not entered into any agreement with an interested party or a joint actor with an interested party in connection with the Private Placement. Neither the Company, nor to the knowledge of the Company after reasonable inquiry, a related party, has knowledge of any material information concerning the Company or its securities that has not been generally disclosed. The Private Placement is exempt from the formal valuation and minority shareholder approval requirements of MI 61-101 (pursuant to subsections 5.5(c) and 5.7(1)(b)) as it was a distribution of securities for cash and neither the fair market value of the Shares distributed to, nor the consideration received from, interested parties exceeded $2,500,000. The material change report in connection with the Private Placement was not filed 21 days in advance of the closing of the Private Placement for the purposes of Section 5.2(2) of MI 61-101 on the basis that the subscriptions under the Private Placement were not available to the Company until shortly before the closing.

As mentioned above, Garth Johnson, Chief Executive Officer and director of Pulse, purchased 1,666,666 Basic Units for an aggregate purchase price of $200,000. As at the closing of the First Tranche, Garth Johnson beneficially owned or controlled 6,084,209 Shares and 1,666,666 Warrants, representing approximately 8.2% of the issued and outstanding Common Shares on a non-diluted basis and 10.2% on a partially diluted basis. The Basic Units were acquired by Mr. Johnson for investment purposes. Mr. Johnson has a long-term view of the investment. Depending upon market conditions and/or other relevant factors, he may acquire of or disclose of additional securities of the Company, either on the open market or through private transactions. A copy of Mr. Johnson’s early warning report will appear under the Company’s profile on SEDAR and may also be obtained by calling 403 714 2336 or delivering a written request to 666 Burrard Street, Suite 500, Vancouver, BC V6C 3P6. The information in this paragraph was provided to Pulse by Garth Johnson.

DETAILED BREAKDOWN OF OIL & GAS ASSETS:

Pulse’s summary of key oil and gas asset details, assuming completion of the Whiskey Creek Acquisition, are as follows and are described in detail below and are prepared on a BOE basis:

Property Description	Proved Developed Producing	Proved Developed Non- Producing	Proved Undeveloped	Probable	Total Proved and Probable
Mannville SA:
Light and Medium Oil	13,700	–	144,900	174,700	333,300
Natural Gas	93,167	–	207,667	266,500	567,334
NGL	21,500	–	48,000	61,600	131,100
Total: ⁽³⁾	128,367	–	400,567	502,800	1,031,734

Whiskey Creek:
Light and Medium Oil	188,000	70,200	–	55,800	314,000
Natural Gas	10,783	–	–	2,917	13,700
NGL	–	–	–	–	–
Total: ⁽²⁾	198,783	70,200	–	58,717	327,700

Bigoray:
Light and Medium Oil	–	259,000	–	61,000	320,000
Heavy Oil	–	13,000		99,100	112,100
Natural Gas	15,367	123,283	–	51,717	190,367
NGL	8,800	44,600	–	19,100	72,500
Total: ⁽¹⁾	24,167	439,883	–	230,917	694,967

		(1)	Bigoray independent reserve evaluation completed by McDaniel & Associates Consultants Ltd. effective December 31, 2016.
		(2)	Whiskey Creek independent reserve evaluation completed by McDaniel & Associates Consultants Ltd. effective December 31, 2016.
		(3)	Mannville Assets independent reserve evaluation completed by Sproule Associates Limited effective February 28, 2017.

Reserve estimates for each independent reserve evaluation report have been prepared by a qualified reserve evaluator in accordance with NI 51-101. The totals presented in the above table are based on different effective dates and therefore may not be representative of the assets in total.

About Pulse Oil Corp.

Pulse is a Canadian company incorporated on September 17, 2012 under the Business Corporation Act of Alberta and has plans to become a leading oil and gas company. Pulse will focus on acquiring affordable, small to medium sized proven oil and gas assets with significant upside. The Company plans to achieve further growth through low-risk, technically diligent drilling, infrastructure ownership and reserve growth utilizing new technology and proven enhanced oil recovery techniques.

[expand title=”Advisories & Contact”]Neither the TSX Venture Exchange, Inc. nor its Regulation Service Provider (as that term is defined under the policies of the TSX Venture Exchange) has in any way passed upon the merits of the Proposed Acquisition and associated transactions and has neither approved nor disapproved of the contents of this press release.

READER ADVISORY

This press release contains forward-looking information. The words “believe,” “expect,” “anticipate,” “plan,” “intend,” “foresee,” “should,” “would,” “could” or other similar expressions are intended to identify forward-looking statements, which are generally not historical in nature. These forward-looking statements are based on management’s current expectations and beliefs concerning future developments and their potential effect on the Company based on information currently available to management. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those anticipated. Statements in this press release containing forward-looking information include but are not limited to the expected completion of the remainder of the Private Placement, the planned use of proceeds of the Private Placement, the completion of the Whiskey Creek Acquisition, and re-starting shut-in production. Forward-looking information involves known and unknown risks, uncertainties, assumptions and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information. Important factors that could cause actual results to differ materially from those in the forward looking statements include, but are not limited to: the volatility of commodity prices, product supply and demand; competition; access to and cost of capital; uncertainties about estimates of reserves and resource potential and the ability to add proved reserves in the future; the assumptions underlying production forecasts; the quality of technical data; environmental and weather risks, including the possible impacts of climate change; the ability to obtain environmental and other permits and the timing thereof; government regulation or action; the costs and results of drilling and operations; the availability of equipment, services, resources and personnel required to complete the Company’s operating activities; access to and availability of transportation, processing and refining facilities; acts of war or terrorism; and general economic conditions and other financial, operational and legal risks and uncertainties. The forward-looking statements contained in this press release are made as of the date hereof and the Company undertakes no obligations to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

Barrels of oil equivalent (boe) is calculated using the conversion factor of 6 mcf (thousand cubic feet) of natural gas being equivalent to one barrel of oil. Boes may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf:1 bbl (barrel) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.

The securities of Pulse Oil Corp., including those discussed herein, have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the “1933 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 1933 Act and applicable U.S. state securities laws. This press 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.

All production and reserves quantities included in the Company’s public filings have been prepared in accordance with Canadian practices and specifically in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities. These practices are different from the practices used to report production and to estimate reserves in reports and other materials filed with the SEC by United States companies. Accordingly, information concerning resources, deposits, production, reserves and any similar information of the Company may not be comparable with information made public by companies that report in accordance with United States standards.

In addition, financial statements of the Company have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, which differ from United States generally accepted accounting principles, and thus may not be comparable to financial statements of United States companies.

SOURCE Pulse Oil Corp.

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Pulse Oil completes first tranche of private placement, completes Mannville Acquisition and plans to start field work program to increase production

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