Petro Viking Energy Inc. is pleased to announce the proposed asset purchase of 100% of Avila’s interests in 53,835 Acres, 43,935 Acres (Net), of mineral rights, associated wells, pipelines and facilities for the purchase price of $50,664,000 CAD.
The Purchase Price for the Acquisition is being satisfied by way of the issuance of 40,440,000 Class A common shares (the “Common Shares”) at $0.60 per share and 30,000,000 convertible preferred shares (the “Convertible Shares”) convertible at a price of $0.80 per share. The Convertible Shares shall have a term of five years (5) and earn an accruing annual dividend at a rate of two percent (2%), payable upon conversion. The Conversion of the Convertible Shares at the election of the holder can only occur after one of three milestones has been achieved: a) the Company exceeds the production rate of 3,000 boe/d, b) the Common Shares trade at a volume weighted average price (VWAP) of more than $1.00 per share for twenty (20) consecutive business days or c) the second year anniversary since the issuance of the Common Shares has occurred. At maturity upon the fifth anniversary of their issuance, the Convertible Shares shall automatically be redeemed on a 1:1 basis along with any accrued dividends by the issuance of Common shares.
Closing is anticipated to occur on or before October 31, 2021, subject to the execution of a comprehensive purchase and sale agreement for the assets and remains subject to the execution of an all related applications and approvals necessary as would be customary within the industry in parallel to submission of all necessary applications and approvals including shareholders and the Canadian Stock Exchange.
Petro Viking in May commissioned Deloitte LLP to complete an interim independent evaluation of its current reserves to include the current production plus 4 proven and 2 probable drilling locations; 6 wells of a potential 15 well locations. Further to the completion of this work as announced on June 1, 2021 the Company commenced a further review and evaluation of the Joint Ventures’ business plan which included over 50 existing wells and 150 additional proven locations operated by Avila Energy. The Management and Directors determined that if Avila was interested they would agree to acquire 100% of the assets of Avila owned and operated in West Central Alberta. It became apparent to both management and Avila that the acquisition would be in the best interest of both Parties to facility the rapid implementation of the Business Plan to the full benefit of the shareholders of both Companies.
Leonard Van Betuw, President and CEO of Avila Energy commented, “We are very pleased with the outcome of the review of our partnership for the past years. We are now about to unleash the full potential of a very deliberate plan of becoming a Carbon Neutral Energy Producer that was envisioned over 5 years ago by Avila.”
“The multiple horizons of proven prospective geological zones, installed pipelines and facilities are now converging on a plan for becoming a full cycle economic dynamo for Carbon Neutral Energy Production.” said Daniel Lucero on behalf of the Board of Directors of Petro Viking.
Summary of the Industry Metrics that form the foundation for the purchase price of $50,664,000 are as follows;
• - Production of approximately 2,000 boe/d on closing with proven development plans underway to exit 2021 at rate of 3,000 boe/d by December 31, from approximately 60 wells with an average production rate of 50 boe/day of low decline of less than 10% from low cost conventional operations; purchased for $16,888 per flowing boe.
• - Exiting 2021 capable of generating Net Income of $23.90 per boe or $26,170,500 per year; < 2X Net Income.
• - 43,935 acres (net) Mineral Rights containing multiple prospective geological targets including the Belly River, Spirit River (Rex) Mannville, Ellerslie, Wabamum and Duvernay with over 150 identified drilling locations; purchased for $1,153 per acre.
• - Total Proven Reserves of 15.3 million boe valued @ NPV10% $152,803,300; purchased for $3.31 per boe.
• - Total Proven + Probable of 28.0 million boe valued @ NPV10% $326,826,800; purchased for $1.81 per boe.
• - Owner and Operator of 50 productive wells, more than 200 kilometers of pipelines and 3 facilities.
• - Decommissioning liabilities of less than $4,000,000 with limited obligations in the following 5 years.
Prior to closing the Company will be seeking approval as deemed necessary for the completion of the Acquisition and the formal change of its name to Avila Energy and the appointment of Leonard B. Van Betuw as a Director, and as the President and CEO of the Company. The Company will be fully embracing the plan to continue as a current low cost natural gas and liquids production in the region. In parallel the Company is continuing to focus on the rapid development of these lands in combination with the completion of the engineering and implementation of its Business Plan and Long Term vision of being a leading operator as a fully Integrated Carbon Neutral Energy Producer through the collective organic development of its 100% owned and operated resources in combination with investment and additional complementary acquisitions.
An advisory & finders fee, based on approved CSE guidelines, will be payable upon closing to an arm’s length third party which has assisted the Company in coordinating and negotiating this transaction.
