CALGARY, Alberta, June 14, 2018 (GLOBE NEWSWIRE) — Toscana Energy Income Corporation (“Toscana” or the “Corporation”) (TSX:TEI) is pleased to announce that it has sold its gas-weighted Gross Overriding Royalty Interests (the “Gas Assets”) to a private company for total cash consideration of $7.5 million, subject to customary industry adjustments, with an effective date of April 1, 2018. The Gas Assets have current net production of approximately 200 BOE/d (65% gas). Proceeds of the sale of the Gas Assets will be utilized to reduce the amounts drawn on the Corporation’s outstanding credit facilities.
Toscana also announced the renewal of its credit facilities. Concurrent with the sale of the Gas Assets, the Corporation has agreed to certain amendments to its credit facilities which have been adjusted to $20 million. Toscana has been advised that such facilities will be increased to $25 million upon the successful acquisition of all of the outstanding securities of Cortona Energy Ltd. (“Cortona”) discussed further below. The credit facilities will have an interim review on December 31, 2018.
Toscana also announced that it is considering the potential acquisition of all of the outstanding securities of Cortona for cash, certain of which securities are owned by certain of the directors and officers of Toscana. Toscana has expressed an interest to those shareholders of Cortona to acquire their shares along with making an offer to acquire the balance of the outstanding securities of Cortona in exchange for cash consideration. Such shareholders of Cortona have indicated that they would be interested in selling their Cortona shares to Toscana subject to negotiating a definitive agreement on terms and conditions to be agreed to among the parties. In considering such a transaction, the board of directors of Toscana (the “Toscana Board”) has established a special committee comprised of members of the Toscana Board who are independent of Cortona (the “Special Committee”) to evaluate and negotiate the terms of such transaction.
Cortona is considered a “related party” of Toscana under applicable securities laws as certain of the directors and officers of Toscana are also significant shareholders of Cortona. Accordingly, the Special Committee, comprised of Martin Hislop and Brian Krausert will evaluate and negotiate any potential transaction on behalf of Toscana. The Special Committee has retained its own legal counsel and financial advisor to assist it with fulfilling its mandate.
Any agreement reached among the parties in respect of a transaction will be subject to customary closing conditions for transactions of this nature including receipt of all necessary regulatory and shareholder approvals. There can be no assurance that the parties will agree to conclude a transaction.
Benefits of the Transaction
- The acquisition of Cortona, would consolidate Toscana’s large oil in place Carmangay Barons Oil Pool, adding approximately 250 BOEs/d of light oil production.
- Additional benefits of the acquisition of Cortona would include:
- Consolidate operatorship of the Carmangay Barons Oil Pool;
- Toscana’s working interest in excess of 90% in the pool;
- long life, low decline light oil reserves; and
- current net combined production from the pool of approximately 450 BOEs/d.
- Oil weighting of Toscana would increase from 36% to 42%.
Cortona was originally formed in the spring of 2016 by certain of the officers and directors of Toscana to preserve for Toscana a strategic opportunity to consolidate the Corporation’s core Carmangay Barons Oil Pool in southern Alberta. As disclosed in a news release of the Corporation dated November 25, 2015, Toscana had an opportunity to acquire the assets that were subsequently acquired by Cortona, however, the collapse of oil prices that began in 2014 and the considerable tightening of the credit and equity markets that followed prevented Toscana from acquiring the Cortona assets at that time.
About Toscana Energy Income Corporation
Toscana Energy Income Corporation is a conventional oil and gas producer with the mandate to acquire high quality, long life oil and gas assets including royalties, non-operated working interests and unitized production for yield and capital appreciation.