CALGARY, Alberta – Kiwetinohk Energy Corp. (“Kiwetinohk” or the “Corporation”) is pleased to announce that it has emerged, as prescribed, from the closure of the business combination of Kiwetinohk Resources Corp. (“KRC“) and Distinction Energy Corp. (“Distinction“) (the “Business Combination“). The Business Combination creates a larger, more efficient and diversified integrated energy company that is positioned to compete in the transition of energy sources with lower associated emissions of greenhouse gases. The Corporation will now operate as Kiwetinohk Energy Corp. Kiwetinohk is now a reporting issuer under applicable Canadian securities laws and its public filings may be accessed under its profile at www.sedar.com.
Kiwetinohk’s strategic target is to build a vertically integrated energy transition company seeking to profitably produce a low carbon/carbon free portfolio of energy products: hydrocarbons, electricity and hydrogen. The Company has already secured a base of liquids-rich gas production operations with development upside as described in the Joint Information Circular (filed in connection with the Business Combination under Distinction’s profile on SEDAR on August 3, 2021). In addition to hydrocarbon production, Kiwetinohk is currently planning a suite of renewable and gas-fired (with carbon capture and sequestration) power generation projects while also searching for hydrogen production and marketing opportunities. With this strategy, Kiwetinohk expects to manage costs and emissions associated with production of low carbon/carbon free forms of consumer energy.
Commenting on the Business Combination, Pat Carlson, Chief Executive Officer of Kiwetinohk, noted: “Driven by climate change, we believe that the market is demanding cleaner energy with less associated emissions of greenhouse gases. Improving our emissions footprint while supplying the electricity grid with a reliable supply of energy is our intended response to that consumer demand. A combination of intermittent renewable energy from solar and wind as well as gas-fired power with carbon capture and sequestration can supply cleaner electricity that the grid needs to replace coal. Our planned suite of gas-fired power projects includes base-load natural gas combined cycle and dispatchable, high efficiency internal combustion engine simple cycle power generation. This combination of cleaner burning gas-fired power sources can contribute to grid stability, enabling Alberta to maximize the economical capture of renewable solar and wind energy. As markets and infrastructure materialize, Kiwetinohk also aspires to produce “blue” and, eventually, “green” hydrogen. In our view, to be sustainable, the energy business has to be profitable and Kiwetinohk intends to provide a profitable and reliable link between low-emissions gas-fired power with carbon capture and clean renewables.”
As a result of the Business Combination, Kiwetinohk is more diversified and expects to benefit from a higher upstream growth profile enabled by the combination of high-quality producing upstream assets in KRC and Distinction. These upstream assets provide an established position in the Montney and Duvernay plays with significant supporting infrastructure which facilitates low operating costs. The upstream properties include high-netback production and an attractive inventory of undeveloped assets.
Kiwetinohk is committed to financial discipline with leverage appropriately matched to risk and a strong balance sheet to maintain financial flexibility as it builds out the next stage of its business plan. To provide sufficient capital resources and liquidity, Kiwetinohk has entered a $225 million senior secured extendible revolving facility (“Credit Facility”). As of September 22, 2021, Kiwetinohk has approximately $40 million of debt outstanding and remaining available liquidity on its Credit Facility of approximately $158 million after consideration for outstanding letters of credit.
Following the Business Combination and after giving effect to the consolidation of KRC’s outstanding common shares on a 10 to 1 basis, Kiwetinohk has approximately 43.6 million common shares issued and outstanding as of September 22, 2021.
Kiwetinohk’s Chief Financial Officer, Jakub Brogowski, commented, “We believe we can pursue both production and development of high-quality oil and gas resources and the early-stage development of power generation projects while meeting target investment returns. To finance the full development of power generation and our other energy transition projects, we intend to partner with financial counterparties and prudently use debt in order to provide low risk attractive returns to our investors.”
With the closing of the acquisition of its Simonette area assets earlier this year and the completion of the Business Combination, the Corporation has accumulated a large, diversified production and land base that includes a well-defined drilling inventory. Although the Corporation continues to evaluate and consider additional upstream consolidation targets, the upstream leadership team is also focused on operational excellence including field operating performance and implementation of a development drilling program. Concurrent with the upstream acquisition strategy, the Corporation has also strategically invested to position itself in select complementary energy transition projects in Alberta, focused, to date, on power development and carbon capture and sequestration.
Kiwetinohk’s strong financial position and anticipated cash flow from producing assets has allowed the Corporation to initiate a modest drilling program for the remainder of the year. Two Duvernay wells in Simonette and three Montney wells in Placid are currently in the drilling phase. Both sets of wells are being drilled off existing pads and will benefit from infrastructure in-place. One of the Montney wells will test an unproven zone with significant recovery potential. Initial results are expected early in 2022. The Corporation’s consolidated production for September has been over 14,000 boe/d (weighted 43% to liquids).
Governance and Leadership
Kiwetinohk is committed to maintaining the highest standards of corporate governance. The Kiwetinohk Board of Directors will benefit from the leadership and experience of Kevin Brown as Chairman. Kevin is Co-Chair and Director of ARC Financial Corp. (“ARC”) which acts as advisor to the funds that are Kiwetinohk’s largest shareholder and own approximately 63% of the combined company post the Business Combination. The management team will continue to be led by Pat Carlson. Pat has been CEO of KRC since its inception in February 2018 and prior to that he co-founded and led four successful Alberta-based energy companies, each sponsored by ARC, including, most recently, Seven Generations Energy Ltd. from which he retired as CEO in June 2017.
The Kiwetinohk board following the Business Combination is:
- Kevin Brown, Chairman
- Pat Carlson
- Leland Corbett
- Nancy Lever
- Kaush Rakhit
- Beth Reimer-Heck
- Timothy Schneider
- Steve Sinclair
- William (Bill) Slavin
Kiwetinohk is seeking to add a third female director by year-end allowing the company to attain a target of 30% per cent female representation at the Board level.
Kiwetinohk’s executive office will remain headquartered in Calgary, Alberta, with the head office is located at Suite 1900, 250 – 2 Street SW, Calgary, Alberta, T2P 0C1.