CALGARY, Alberta, Oct. 11, 2018 (GLOBE NEWSWIRE) — Prairie Provident Resources Inc. (“Prairie Provident” or the “Company”) (TSX: PPR) is pleased to announce the closing of its previously announced bought deal financing (“Bought Deal Financing”) and strategic private placement, each led by Mackie Research Capital Corporation (“MRCC”) for total gross proceeds of $5.5 million, including exercise of the over-allotment option under the Bought Deal Financing.
Pursuant to the Bought Deal Financing, the Company issued 6,810,200 subscription receipts (“Subscription Receipts”) at a price of $0.39 per Subscription Receipt and 3,750,150 common shares on a “flow-through” basis pursuant to the Income Tax Act (Canada) (“Flow Through Shares”) at a price of $0.46 per Flow-Through Share, for total gross proceeds of approximately $4.4 million.
In addition, the Company closed its previously announced private placement with a strategic investor of an additional 2,780,000 Subscription Receipts at a price of $0.39 per Subscription Receipt for gross proceeds of approximately $1.1 million (the “Private Placement” and, together with the Subscription Receipt portion of the Bought Deal Financing, the “Subscription Receipt Offering”).
As previously announced on September 13, 2018, the Company has entered into an agreement to effect the acquisition of Marquee Energy Ltd. by way of a plan of arrangement (the “Arrangement”) whereby Marquee Energy Ltd. (“Marquee”) shareholders will receive 0.0886 of a Prairie Provident common share for each Marquee share. Upon completion of the Arrangement, Prairie Provident production is anticipated to be approximately 7,700 boe/d (69% oil and liquids), and estimated proved plus probable reserves more than double to 43,321 Mboe as of December 31, 2017, yielding a pro forma net asset value per share (based on estimated NPV10 of such reserves at December 31, 2017) of $2.71 (or $561 million).
The gross proceeds from the Subscription Receipt Offering were placed in escrow and will be released to the Company (together with interest thereon), and each holder of Subscription Receipts shall receive one unit of the Company (a “Unit”) for no additional consideration, upon MRCC receiving a certificate from the Company to the effect that: (i) all conditions precedent to the completion of the Arrangement have been satisfied or waived in accordance with the terms of the definitive agreement in respect of the Arrangement (the “Arrangement Agreement”) (any such waiver to be consented to by MRCC, acting reasonably); and (ii) receipt by the Company of all necessary regulatory and other approvals regarding the Subscription Receipt Offering and the Arrangement.
Each Unit shall consist of one common share of the Company (a “Unit Share”) and one-half of one share purchase warrant (each whole share purchase warrant, a “Warrant”). Each Warrant will entitle the holder to acquire one common share (a “Warrant Share”) at the exercise price of $0.50 until October 11, 2020.
If: (i) the Arrangement has not been completed by 5:00 p.m. (Calgary time) on December 6, 2018 (or such later date as MRCC may consent in writing); (ii) the Arrangement Agreement is terminated in accordance with its terms; or (iii) the Company advises MRCC or the public that it does not intend to proceed with the Arrangement, the gross proceeds from the Subscription Receipt Offering will be reimbursed pro rata to the holders of Subscription Receipts together with each such holder’s pro rata portion of interest earned thereon, if any. To ensure that each holder of the Subscription Receipt receives an amount equal to the aggregate purchase price of such Subscription Receipts, the Company shall contribute such amounts as are necessary to satisfy any shortfall.
For each Flow-Through Share, the Company has covenanted to incur and renounce to the subscriber, effective for the fiscal year ended December 31, 2018, qualifying “Canadian exploration expenses”, within the meaning of the Income Tax Act (Canada), in an amount equal to the purchase price of the Flow-Through Share.
The Toronto Stock Exchange (“TSX”) has conditionally approved the listing of the Flow-Through Shares, the Unit Shares issuable pursuant to the Subscription Receipts, and the Warrant Shares issuable upon exercise of the Warrants. Listing is subject to the issuer fulfilling all of the requirements of the TSX on or before December 18, 2018. The Subscription Receipts and Warrants will not be listed on the TSX.
Light Oil Drilling Program Commencing in October
Prairie Provident is also pleased to announce it has expanded its planned light-oil Granite Wash drilling program at Evi, as part of its flow through share commitment, to four exploration wells (3.5 net). The Company’s Evi exploration program will commence in October 2018, at an estimated cost of approximately $1.5 million per well to drill and complete. In addition to its exploration program, Prairie Provident also plans to drill two lower-risk Slave Point light-oil development wells in the area following the completion of its exploration program. These wells are expected to come on stream in February and contribute to first quarter 2019 production.