COPL Secures Credit Facility for up to $65M

Source: 2/18/2021, Location: North America

Canadian Overseas Petroleum Limited ("COPL"), an international oil and gas exploration and development company, announces that:
- The Company has been notified that its previously announced US$65 million Senior Credit Facility ("Credit Facility" or "Facility") was approved by the Investment Committee of the Lender, a US based Global Investment Firm (the "Lender")
- This represents a significant positive step in the previously disclosed planned process of obtaining financing and completing the closing of its acquisition of Atomic Oil and Gas LLC ("Atomic") and its related entities, as announced on December 16, 2020.
- The facility has a term of four years and is subject to typical lending conditions through its term.
- The Facility has a base size of $45 million, with an additional, or "accordion", $20 million to fund future development at the sole discretion of the lender.
- The terms of the Facility are market competitive and availability of the Facility remains subject to execution of final definitive loan documentation and satisfaction of customary conditions precedent.

Since signing the Credit Facility Term Sheet with the Lender, as announced on 19 January 2021, the Company has been working with the Lender to complete due diligence including review of the Company's development and capital investment plans for 2021 and 2022 at the Barron Flats Unit and Cole Creek Unit, analysis by independent engineers and technical consultants of the response of the BFU oil production to gas injection, and other customary and confirmatory due diligence.

Draw down of the Credit Facility will allow the Company to complete the $54 million acquisition of Atomic and its related entities as disclosed on December 16, 2020. Funds from the Credit Facility will be used to pay Atomic the remaining $41 million cash component outstanding to complete the transaction. Atomic will use these funds to retire its outstanding Bank and Shareholder loans, as well as outstanding payables of Atomic and its related entities to achieve a nil working capital deficit as per the terms of the COPL-Atomic Purchase and Sale Agreement.

Draw down of the Credit Facility remains subject to satisfying customary conditions precedent which the Company is working to complete, including completion of a Financial Audit by Atomic for fiscal years 2018 and 2019, and an Auditors review of the 9 months ending September 30, 2020. The Audit commenced in December and is nearing completion.

Arthur Millholland, President and CEO, commented : "This loan will facilitate the completion of the Atomic acquisition which will be materially value enhancing to COPL, providing an immediate and growing revenue stream from day one. Crude oil prices have increased by 50% since we entered into the transaction thus enhancing the overall value of the proposition. Working with our new colleagues we plan to accelerate the production profile from the Atomic assets. This represents a step change in the strategic growth opportunities open to COPL and we look to the future with renewed confidence."

Ryan Gaffney, CFO, added: "Approval of the Credit Facility by the Lender's investment committee is a key milestone to completing the Atomic acquisition. The quality of the assets we are acquiring has allowed the Company to attract the debt necessary to complete and we are working with the Lender to complete loan documentation in the coming week."

Highlights of the transaction to COPL
• The low crude oil price, which initially enabled COPL to entertain the transaction, has increased significantly which enhances the overall value;
• The acquisition has a high NPV asset at a price well below traditional metrics: Proved(P1) value of $101.7mm (net of royalties); Proved + Probable(P2) value of $185.8mm (net of royalties) based on WTI pricing for 2020 of $39/bbl;
• The acquisition presents a high ROI > 50%; $2.18/bbl acquisition cost on P2 reserves vs a value of $7.52/bbl at NPV10%. (net of royalties) based on WTI pricing for 2020 of $39/bbl;
• COPL receives material leverage via the transaction, due to enhanced scale and funding
• The new enlarged team will capitalise on the Company's existing technical resources combined with operational expertise.

· M&A and Debt Advisor: Eight Capital; Calgary, Alberta, Canada
· Debt Advisor: ERG Capital Partners (US) LLC, South Norwalk, CT, USA
· Legal Advisors: McCarthy Tétrault; London, United Kingdom, Calgary, Alberta, Canada; Davis Graham & Stubbs LLP; Denver, Colorado, USA

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