Lucero Energy Corp. is pleased to announce the Company has executed and closed a definitive purchase and sale agreement with an arm's length purchaser, to divest of certain non-strategic, non-operated assets within Lucero's North Dakota Bakken/Three Forks play (the "Disposition" and "Disposed Assets") for cash consideration of C$140.2 million1 (US$104.6 million) before customary closing adjustments2. The effective date of the Disposition is January 1, 2023 with a closing date of June 15, 2023.
THE DISPOSITION
Production from the Disposed Assets is expected to average approximately 2,300 Boe/d in 2023, and is not strategic for Lucero given the Disposed Assets have a low working interest and present limitations for development given they are non-operated. The Disposition crystalizes and accelerates significant value at attractive metrics in the current market, while enabling Lucero to maintain strategic, operated production and development potential that offers meaningful optionality for the future.
The Disposed Assets include:
• Average 2023 production of approximately 2,300 Boepd (80% light oil & natural gas liquids);
• Forecasted 2023 net operating income3 of C$30 million at US$75 WTI;
• 153 (8 net) drilling locations; and
• Total proved reserves of 15.0 MMboe and total proved and probable reserves of 20.2 MMboe at December 31, 2022, as evaluated by Lucero's independent reserves evaluator, Netherland, Sewell & Associates, Inc.
Upon closing of the Disposition, Lucero will have no debt and expects to have more than C$40 million of working capital3, affording the Company greater financial flexibility to pursue initiatives aimed at further enhancing shareholder value, including potential accretive acquisitions, organic growth and/or share buybacks as outlined below.
Pursuant to the Disposition, the Company's senior secured credit facility has been revised to US$160 million.
RBC Capital Markets acted as financial advisor to Lucero in connection with the Disposition.
NORMAL COURSE ISSUER BID
Lucero is also pleased to announce that the TSX Venture Exchange (the "TSXV") has accepted the Company's Notice of Intention to make a Normal Course Issuer Bid (the "Bid") to purchase for cancellation, from time to time, as the Company considers advisable, up to a maximum of 33,120,534 common voting shares in the capital of the Company (the "Common Shares"), which represents 5.0% of Lucero's 662,410,687 Common Shares outstanding as at the date hereof. The Bid will commence on June 19, 2023 and terminate on the earlier of June 18, 2024 and the date on which Lucero has acquired the maximum number of Common Shares allowable under the Bid or the Bid is terminated at the option of the Company. Lucero has retained Peters & Co. Limited as the broker to conduct the Bid on the Company's behalf.
The Company is of the view that at certain times, the trading price of Lucero's Common Shares may not fully reflect the underlying value of the Company's business. As such, having the ability to repurchase Common Shares for cancellation may represent an attractive opportunity to deploy financial resources as a means of potentially enhancing the Company's per Common Share metrics, thereby increasing the underlying value of the Common Shares for all shareholders.
Purchases of Common Shares will be made on the open market through the facilities of the TSXV and/or permitted alternative trading systems. The price that the Company will pay for any Common Shares purchased will be the prevailing market price of the Common Shares at the time of such purchase. The actual number of Common Shares that may be purchased for cancellation and the timing of any such purchases will be determined by the Company. Payment for the Common Shares will be made in accordance with TSXV requirements and applicable securities laws. The Company has not purchased any Common Shares in the past 12 months through a normal course issuer bid.
