CALGARY, AB – Topaz Energy Corp. (“Topaz” or the “Company”) is pleased to announce that it has completed a strategic infrastructure acquisition whereby it acquired, for cash consideration of $100 million, a 12.5% working interest in Advantage Oil & Gas Ltd.’s (“Advantage”) Glacier gas plant, which has raw gas processing capacity of 400 mmcf/d and services the Montney resource play (the “Glacier Plant Acquisition”). Advantage is a Canadian intermediate, natural gas and liquids development and production company with significant operated assets in the Montney resource play in Western Canada.
In connection with the Glacier Plant Acquisition, Topaz and Advantage entered into a 15-year volume commitment agreement whereby Topaz will earn a fixed natural gas processing fee of $0.66/mcf for a fixed volume of 50 mmcf/d; this equates to incremental annual cash flow of $12 million for Topaz. The volume commitment fee is payable regardless of actual throughput, and Topaz is not responsible for operating or capital costs for its proportionate share of ownership in the gas plant.
PRIVATE PLACEMENT AND CREDIT FACILITY
Topaz completed a private placement of 13.2 million common shares of the Company for gross proceeds of $145.3 million; 11.7 million common shares were issued on June 29, 2020 and 1.5 million common shares are committed to be issued in a secondary closing on July 6, 2020. Proceeds from the private placement were used to finance a portion of the Glacier Plant Acquisition as well as funding potential additional royalty or infrastructure acquisition opportunities.
Topaz has considerable financial flexibility and remains undrawn on its $75 million credit facility with a major Canadian bank that matures June 10, 2022. Additionally, Topaz expects to continue to generate free cash flow in excess of its dividend distribution.
Topaz is pleased to announce the appointment of Mrs. Darlene Harris to its Board of Directors. Mrs. Harris is a Chartered Professional Accountant (CPA, CMA) and has devoted over 30 years in increasingly senior roles at Shell Canada. Mrs. Harris has broad experience in strategic acquisitions & divestments, financial markets, banking, pension management and governance, talent management, and directorship in the oil & gas industry.
Topaz also announces that its second quarter 2020 dividend of $0.20/share was paid on June 30, 2020 to shareholders of record on June 15, 2020. This quarterly cash dividend is designated as an “eligible dividend” for Canadian income tax purposes.
ABOUT TOPAZ ENERGY CORP.
Topaz is a private royalty and infrastructure company, with a business strategy to provide shareholders with consistent yield and growth.
Topaz currently owns gross overriding royalty interests on 2.2 million net acres of land owned by Tourmaline Oil Corp., as well as non-operated interests in infrastructure assets in the Western Canadian Sedimentary Basin with cumulative natural gas processing capacity of 135 mmcf/d. The ownership of its infrastructure assets is underpinned by long-term fixed natural gas processing commitments. Topaz has established strategic business relationships with two high-quality Canadian oil and gas producers and expects to grow its business through future acquisition opportunities with current and additional high-quality counterparties. Topaz believes that it offers investors a unique investment opportunity offering the best attributes of both the royalty and infrastructure market segments.
All amounts in this news release are stated in Canadian dollars unless otherwise specified.