Columbus, the oil and gas producer and explorer focused on onshore Trinidad with the ambition to grow in South America, is pleased to announce the completion of the purchase of Steeldrum Oil Company Inc ("Steeldrum").
The Company also confirms that the quarterly Operations and Business Update for Q3 2018 will be reported via RNS on 10 October 2018, followed by a presentation by Columbus' Executive Chairman, Leo Koot, to shareholders and other stakeholders that evening, with drinks from 6.30pm and the presentation commencing at 7.00pm at Manicomio, 6 Gutter Lane, London EC2V 8AS.
Leo Koot, Executive Chairman of Columbus, commented:
"We are very pleased to have completed the acquisition of Steeldrum, which I believe will be a material step in the growth of Columbus and establish a very solid base for our Trinidad operations. The Company now has a large, well balanced portfolio of assets strung across the south and south-west of Trinidad. The portfolio includes low-risk but highly prospective exploration opportunities in the South West Peninsula ("SWP"), a development project in Cory Moruga and 5 producing oilfields (Goudron, Innis Trinity, South Erin, Bonasse and Icacos). This provides the Company with an excellent opportunity to exploit our existing and new assets through operational excellence and also grow organically through exploration and the Cory Moruga development project. We will now focus on growing production and revenues in Innis Trinity and South Erin through the adoption of a similar operational strategy to our existing fields.
We expect all integration issues associated with Steeldrum transaction to have been addressed by the end of Q4 2018.
As set out in our Interim Results on 27 September, the Company's objective is for production from Trinidad to exceed 1,000 bopd by the end of 2018 and the consolidated group, post the Steeldrum transaction, is expected to remain operationally cash flow positive.
We now officially welcome the Steeldrum oil and gas team into the larger Columbus group. The Steeldrum team are a well-respected oil and gas team, experienced in drilling wells in Trinidad, which is ideal for our expanded portfolio.
Additionally, as part of the transaction, we will have access (at preferential rates) to a drilling rig suitable for our planned exploration activities in the SWP and a production rig.
I am delighted to have completed this deal with Steeldrum and we are on track to building a core exploration, appraisal, development and production hub in the south and south-west of Trinidad."
Information on the Steeldrum transaction and the combined Columbus - Steeldrum group
Steeldrum is the parent company for the West Indian Energy Group Ltd and is the owner of the licences for the Innis-Trinity field (100% and operator), South Erin field (100% and operator) and the Cory Moruga development project (83.8% and operator), all located in southern Trinidad and close to Columbus's existing assets.
The Innis-Trinity field and South Erin field are currently producing approximately 150 barrels of oil per day ("bopd") and 100 bopd respectively, with remaining 2P reserves of approximately 4 million barrels of oil ("mmbbl") and 1.6 mmbbl respectively. The Cory Moruga development is expected to have recoverable reserves of approximately 1.1 mmbbl.
At the time of announcing the Steeldrum transaction, the Company also announced the availability of a short-term Convertible Security facility (the "2018 Lind Facility"), which provides the Company with the right, but not the obligation, to drawdown up to US$3.25 million. The 2018 Lind Facility provides the Company with access to additional funds, should they be required, to support the Steeldrum transaction, including costs associated with integrating the two companies or accelerating certain operational activities. The 2018 Lind Facility specifically contemplates the ability to draw down US$1.25 million (of the US$3.25 million) to repay a US$1.25 million loan taken out by Steeldrum with North Energy Capital AS ("North Energy" and "North Energy Loan"). Steeldrum is currently in dispute with North Energy over the North Energy Loan and may be in default of the North Energy Loan. The Company expects to resolve the dispute by repaying the North Energy loan by drawing down US$1.25 million from the 2018 Lind Facility. North Energy holds security over the shares in the company that owns the Innis-Trinity field ("Innis-Trinity Security") and also Talon (defined below). Upon repayment of the North Energy Loan, the Company expects the Innis-Trinity Security to be released. Talon is not beneficially owned by the Columbus group. The Company has made no decisions as to whether it will drawdown any of the US$2.0 million remaining under the 2018 Lind Facility, once the above-mentioned US$1.25 million has been drawn-down for repayment of the North Energy Loan.
The consolidated group, post the Steeldrum transaction, is expected to be operationally cash flow positive.
Completion of the Steeldrum transaction
Consistent with the Company's announcement on 10 September 2018, the Company has issued 109,166,209 ordinary shares to the sellers of Steeldrum ("Sellers") to complete the acquisition (the "Steeldrum Completion Shares"). The shares issued comprise the consideration shares totalling 92,743,775 and 16,422,434 deferred consideration shares following the re-issue of the Cory Moruga E&P licence. The Steeldrum Completion Shares (equivalent to 16.8% of the current issued share capital) will rank pari passu in all respects with the Company's existing ordinary shares. Application has been made for the Steeldrum Completion Shares to be admitted to trading on AIM, ("Admission"), and it is expected that Admission will become effective and that dealings will commence on or around 11 October 2018. The Sellers are subject to certain lock-in arrangements that will prohibit them divesting the Steeldrum Completion Shares for a period of at least 6 months post completion, save for 10% of the base consideration shares.
Steeldrum is also the parent company of Talon Well Services Ltd ("Talon"), which owns a drilling rig, suitable for the Company's planned exploration activities in the South West Peninsula, and a production rig located in Trinidad. The purchase of Talon is not part of the transaction and the parties have entered into an agreement to ring fence Talon within the Columbus group until such time as it can be legally carved out from the Columbus group. As part of the transaction, Talon has granted Columbus preferential rates for the use of its two rigs.
In completing the purchase of the Steeldrum, the Buyer (Columbus Energy (St Lucia) Limited) waived the requirement of Petrotrin's consent to the transaction ("Petrotrin's consent"). Petrotrin's consent applies to the Innis-Trinity Field IPSC and the South Erin Farmout Agreement. Pursuant to the terms of the relevant agreements, Petrotrin's consent is not required prior to completion. Columbus will continue to seek Petrotrin's consent post completion. There is a risk that Petrotrin may not consent to the Steeldrum transaction and seek to terminate the relevant agreement although the Company does not expect this to be the case and will continue to liaise with Petrotrin to seek its consent.
Steeldrum currently engages Gelco Energy Consultants to provide Managing Director services for the Steeldrum group. Post completion of the Steedrum transaction, the Company will continue with these arrangements on terms commensurate with the current Columbus management team. The combined Columbus - Steeldrum group will undertake the normal integration management post completion, with Stewart Ahmed continuing to lead the combined group's technical and operational activities.
Change of registered address
The Company notes that its registered office is now Suite 114, 90 Long Acre, London, WC2E 9RA. This move to a smaller London office is to manage our administrative cost in a prudent manner. There was no material cost associated with the move.
Total Voting Rights
For the purposes of the Disclosure and Transparency Rules of the Financial Conduct Authority, the Board of Columbus hereby notifies that as at the date of this announcement, and after the issuance of the Steeldrum Completion Shares, the Company's issued share capital consists of 759,452,621 ordinary shares with a nominal value of 0.05p each, with voting rights ("Ordinary Shares"). The Company does not hold any shares in Treasury. Therefore, the total number of Ordinary Shares in the Company with voting rights is 759,452,621. This figure may be used by shareholders in the Company as denominator for the calculations by which they may determine if they are required to notify their interest in, or change to their interest in, the Company under the Financial Conduct Authority's Disclosure Guidance and Transparency Rules.
