Prospera Energy Inc. (PEI) has strategically acquired this light oil property to diversify its oil product mix and to realize higher margin. This acquisition is entirely success-based eliminating any requirement for large up front capital investment. This asset provides PEI with a significant development opportunity along the light-oil formation fairway. This light-oil asset is composed of shallow pools that can be developed with vertical wells and recompletion of existing wells. Operations of these wells can be maintained with solution gas and pressure supported through water injection resulting in low capital deployment and low operating expense to maintain.
Light Oil Acquisition Summary
Prospera Energy wishes to provide details in respect to its recent property acquisitions. Readers are referred to its July 21, 2022, press release. The parties have amended a purchase and sale agreement dated April 7, 2022, pursuant to which the Corporation agreed to purchase an undivided 50% working interest in exploration lands located near Cassels, Alberta for $302,000 payable by the issuance of that number of convertible debentures. The convertible debentures are now convertible into common share units at the option of the holder at $0.075 during the first year and $0.10 during the second year, bear interest at 8% per annum, and are for a two-year term. Each unit consists of one common share and one warrant exercisable at $0.075 for two years from issuance, subject to the Corporation’s right to accelerate the expiry date if the common shares of the Corporation trade at $0.30 for a period of 20 consecutive days. Applicable interest will be payable in cash or shares at the then market price, at the option of the Corporation. The vendor in this transaction was a private Alberta corporation of which Sam David, the president of the Corporation, had an ownership interest. The Corporation’s independent directors negotiated the transaction and relied on exemptions contained in MI 61-101 in that the market value did not meet the 25% of the Corporation’s market cap.
The Corporation has the right to recomplete an additional well, on the basis of such costs being split equally with the Vendor. If successful, the Corporation will pay an additional $405,500 (half cash and half in common shares at the then 30-day weighted average) to purchase a 50% interest in such well and lands.
If the first Option is exercised, the Corporation will have the right to recomplete 2 further wells on the same basis. If successful, the Corporation will pay $1,776,000 on the same basis as above for a 50% working interest in the additional wells and property.
These transactions are subject to TSXV exchange approval.
