CALGARY, Alberta, Dec. 17, 2018 (GLOBE NEWSWIRE) — Cequence Energy Ltd. (“Cequence” or the “Company”) (TSX: CQE) is pleased to announce that its senior lender has completed a redetermination of the borrowing base under the Company’s senior secured credit facility (the “Credit Facility”), and has confirmed the borrowing base remains at $7 million. Other than outstanding letters of credit totalling approximately $1.5 million, the Company currently has no amounts drawn under the Credit Facility.
Acquisition of the Company’s $60 million Term Loan
Cequence also wishes to announce that it has been advised that its $60 million second lien senior secured term loan facility due October 3, 2022 (the “Term Loan”), as well as the 1,841,459 common share purchase warrants (the “Warrants”) issued in conjunction with the term loan, have been purchased from CPPIB Credit Investments Inc. (“CPPIB Credit”), a wholly owned subsidiary of the Canada Pension Plan Investment Board. The Term Loan and Warrants were purchased by an individual who, in subsequent transactions, sold interests in the Term Loan and Warrants to a small group of persons, including two of the Company’s directors and officers, Don Archibald (Executive Chairman) and Howard Crone (Executive Vice-President) (each, together with the aforementioned original purchasing individual, the “Consortium”). Pursuant to an agreement among the members of the Consortium, Messrs. Archibald and Crone each acquired 9.6% of the outstanding Term Loan and 9.6% of the Warrants. The Warrants have an exercise price of $2.00 per common share and are exercisable at any time until September 13, 2022. The Term Loan has an outstanding principal balance of $60 million and a current interest rate of 5% per annum. The terms and conditions of the Term Loan remain unchanged from the loan agreement dated July 26, 2018, which has been assigned to the Consortium. The Term Loan is more fully described in the Company’s Management’s Discussion and Analysis for the three and nine months ended September 30, 2018 which is available under the Company’s profile on SEDAR at www.sedar.com. In connection with the purchase of the Term Loan by the Consortium, the Company has entered into an intercreditor and priority agreement among the Company, the Company’s senior secured lender, and the Consortium.
Cequence thanks CPPIB Credit for its support of the Company over the past five years and the contributions it has made to the Company’s growth and development as one its financial partners.
Cequence has utilized the full $8.6 million raised through its recently completed rights offering to fund the successful drilling and completion of 2 gross (2 net) Dunvegan oil wells as eligible Canadian development expense. The 10-4-62-26W5 and 16-02-62-26W5 Dunvegan oil wells have lateral lengths of 2,100 m and 1,450 m, with 50 and 40 completion stages cemented in place respectively. Following their completion, the wells were brought online for clean up during the week of December 3, 2018, and flowed through temporary test equipment for approximately 5 days each. During the last 24 hour flow period the 10-4-62-26W5 well produced approximately 250 bbl/d of oil and 578 bbl/d of water with 11% of completion water recovered, while the 16-02-62-26W5 well produced 264 bbl/d of oil and 447 bbl/d of water with 7% of completion water recovered. The wells have been shut in awaiting connection to permanent production facilities and for pumping equipment to be installed. The Company is encouraged by the initial flow results and expects the wells should produce at or above the first month internal model of 300 bbl/d of oil. These initial well test results are preliminary only as no pressure transient analysis or well-test impressions have been carried out, and these test results are not necessarily indicative of long-term performance or ultimate recovery.
Cequence is a publicly traded Canadian energy company involved in the acquisition, exploitation, exploration, development and production of natural gas and crude oil in western Canada. Further information about Cequence may be found in its continuous disclosure documents filed with Canadian securities regulators at www.sedar.com.