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CALGARY,
AB, June 17, 2024 /CNW/ - Fiddlehead
Resources Corp. ("Fiddlehead" or the "Company") and
its Board of Directors (the "Board") is pleased to announce
it has recommended Mr. Dale Miller,
Mr. David Ritter, Mr. Gregory Turnbull, and Mr. C. Neil Smith stand for election as independent
directors at the Company's upcoming 2024 Annual General and Special
Meeting of Shareholders, joining Brent
Osmond currently as the Chairman, President & CEO of the
Company.
Board of Directors of
Fiddlehead
Brent Osmond, Chairman,
President & CEO
Mr. Osmond is a results-focused executive, leader, visionary and
strategist with a track record of extraordinary results. Mr. Osmond
has 18 years of oil & gas experience, eleven of which have been
in senior executive level roles. As Chief Financial Officer, Mr.
Osmond has experience building companies with assets in
Alberta, Saskatchewan, British Columbia, North Dakota and Montana. He has guided private equity backed
companies and publicly traded companies and has also taken private
companies through liquidity events including IPO and RTO
transactions. Mr. Osmond has worked for Husky Energy Inc.,
Questerre Energy Inc., Perpetual Energy Corp., and Mountainview
Energy Inc. in the public domain, and private entities including
Nytis Exploration Company Inc., Prosper Petroleum Ltd., and Clover
Oil and Gas, Inc. Mr. Osmond is a strategic, creative,
solutions-focused executive, having negotiated, structured and
sourced over $500 million in debt and
equity capital in his career. A Chartered Professional Accountant,
Mr. Osmond is a graduate of Memorial
University of Newfoundland with a Bachelor of Commerce,
Co-op degree.
Dale Miller, Independent
Director
Mr. Miller is a professional engineer with over 40 years of
experience in the Oil and Gas industry, primarily in the Western
Canadian Sedimentary Basin. He is currently President of Dark Horse
Energy Consultants Ltd., and serves on the Board of Directors of
Yangarra Resources Ltd. and Prairie Provident Resources Ltd. Prior
thereto, Mr. Miller was President, COO & Director of Long Run
Exploration Ltd., which at the time was producing
~30,000 boe/d, and was sold to Calgary Sinoenergy Investment
in 2016 for ~$770 million. Dale has
an extensive senior management resume with exploration and
production companies, including Pace Oil & Gas, Gibraltar
Exploration and Penn West Petroleum. He holds a Bachelor of Science
degree, Petroleum Engineering, from the University of Tulsa, and is a member of APEGA.
David Ritter, Independent
Director
Mr. Ritter is currently the President of The Haymarket Group,
LLC, a boutique management consulting firm based in The Woodlands, Texas, USA. He is also an
External Advisor for McKinsey and Company. Dave is an accomplished
senior operations and strategic executive with over 45 years of
experience in the energy industry. Most recently he was the Chief
Operating Officer of Philadelphia Energy Solutions (PES) which was
the largest refining complex on the US Eastern seaboard. Prior to
that Dave was Senior Vice President in Saudi Refining, Inc.
ARAMCO's US affiliate. Dave retired from Royal Dutch Shell at the end of 2010, as group
Vice President of Global Competitive Intelligence and Strategy.
Dave began his career with Mobil/ExxonMobil and held senior
leadership positions in refining, marketing, supply, trading,
M&A and corporate strategy and spent more than a third of his
career outside the U.S. He also served as a leader in the
Downstream oil & gas consulting practice of CG Ernst &
Young, LLC.
David received his MBA in Finance as well as his bachelor's
degree in civil engineering from Lehigh
University. He also did post graduate work in Operations
Management at the University of Southern
California.
Gregory Turnbull,
Independent Director
Mr. Turnbull has previously served as an officer or director of
many public and private companies, including as a director of
Crescent Point Energy, Heritage Oil, Storm Resources, and Sunshine
Oilsands, and as the Chair of Alberta Health Services and Chair of
the Calgary Zoo. Greg is currently a director of SNDL and is also a
strategic advisor for Fasken Martineau DuMoulin LLP. Prior to
joining Fasken, Greg was a long-time partner and managing partner
at McCarthy Tétrault LLP. Greg has extensive experience in
corporate governance matters providing advice to boards of
directors and special committees, also in finance and securities
transactions, including public and private share and debt
financings, takeover bids, initial public offerings, business
combinations and international stock exchange listings. Greg holds
a Bachelor of Arts degree (with honours) from Queen's University
and a Bachelor of Laws degree from the University of Toronto.
C. Neil Smith, Independent
Director
Mr. Smith has over 35 years of technical, financial and
international capital markets experience. Most recently, Mr.
Smith was the Chief Operating Officer at Crescent Point Energy
Corp. (Veren Inc.) where he was responsible for all aspects of the
company's capital budget, safe operations, reserves management and
acquisition evaluations as well as corporate operations risk
management analysis and social responsibility reporting. He has a
proven track record of creating shareholder value through the
innovative development of assets in a safe and capital-efficient
manner. Mr. Smith also sits on the Board of Southern Energy Corp. a
Toronto and London exchange listed company. Mr. Smith
holds a Bachelor of Applied Science degree in Geological
Engineering and a Masters of Business Administration in Finance
(Dean's List).
Transformational Acquisition and
Financing Transactions
The Company along with a wholly owned subsidiary of Fiddlehead
("FinanceCo"), together the ("Parties"), have
previously entered into a definitive agreement dated May 29, 2024 (the "Definitive Agreement")
pursuant to the acquisition ("Acquisition") of South
Ferrier, Strachan area assets ("Assets") from a senior
Canadian producer.
In addition, Fiddlehead has previously entered into an agreement
with Research Capital Corporation to act as the lead underwriter
and sole bookrunner (the "Underwriter"), in connection with
a marketed underwritten, private placement offering of subscription
receipts of FinanceCo (the "Subscription Receipts") at a
price of $0.20 per Subscription
Receipt for minimum aggregate gross proceeds of $10,000,000 (the "Offering"). It is
expected that the management and directors of the Company will be
participating alongside investors in the Offering, in conjunction
with a "presidents list", for an aggregate minimum of $4,000,000.
Each Subscription Receipt will entitle the holder thereof,
without payment of any additional consideration and without further
action on the part of the holder, upon the satisfaction of the
Escrow Release Conditions (as defined herein) to receive one unit
of the Company ("Unit"). Each Unit will consist of one
common share of FinanceCo ("Underlying Share") and one
common share purchase warrant of FinanceCo ("Underlying
Warrant"). Each Underlying Warrant entitles the holder thereof
to purchase one common share of FinanceCo (a "Warrant
Share") at an exercise price of $0.24 per Warrant Share at any time up to
60 months following the satisfaction or waiver of the Escrow
Release Conditions. The Units, Underlying Shares, Underlying
Warrants and Warrant Shares are collectively referred to herein as
the "Underlying Securities". In addition, the Company will
use commercial reasonable efforts to obtain the necessary approvals
to list the Underlying Warrants that will be exchanged for warrants
of Fiddlehead ("Fiddlehead Warrants") on equivalent
terms on the TSX Venture Exchange ("TSXV").
The total consideration for the Assets will be $22,500,000 in cash, subject to customary
adjustments (the "Purchase Price"). The Purchase Price is
expected to be satisfied through a combination of: (i) the net
proceeds of the Offering; and (ii) a $15,000,000 credit facility ("Credit
Facility"). The Company has entered into a term sheet for the
Credit Facility with a private lender.
Acquisition Highlights – South
Ferrier, Strachan Area Assets
Producing Assets and Land Positions in Cardium
Fairway
- Undeveloped land position of 25,496 hectares (gross) / 14,213
hectares (net)
- Developed land position of 19,136 hectares (gross) / 11,227
hectares (net)
- Average working interest of approximately 77% of producing
wells
- All land is held by production with no expiries
- Existing infrastructure has available capacity to handle growth
production
- Estimated exit production of 1,809 boe/d in 2024, 2,507
boe/d in 2025, and 3,107 boe/d in 2026
- Strong liability management rating (LMR) of approximately
3.0x
Significant Reserves & Substantial Resource Development
Upside
- Significant remaining PDP reserves of 3.7 million boe,
valued at an NPV10% of $34.5
million1
- Substantial proved and probable (2P) reserves of 7.9
million boe, valued at an NPV10% of $69.2 million1
- 50+ identified development well drilling locations from
existing acreage, many on existing well pads in
defined Cardium fairway
- Significant upside and extensive drilling inventory across
multi-stacked zones in the Belly River, Falher, Glauconitic,
Mannville, Notikewin, Rock Creek and Viking
- Multi-well drilling campaign expected to commence in 2024,
following the closing of the Acquisition, for an initial
2 Cardium horizontal wells ramping to 4 horizontal wells per
year
Compelling Investment Opportunity
- Fiddlehead will acquire strategically positioned assets with
strong risk adjusted cash flow and significant commodity price
upside
- Attractive acquisition multiple of 2.24x net operating income
(NOI) (estimated annualized Q2 2024), based on the estimated
$20.9 million adjusted purchase
price2
Free Cash Flow Production with Development Upside
- Stable low decline, average working interest production of
approximately 1,750 boe/d (estimated Q2 2024)3
- Free funds flow driven by low decline cash flow, and has
liquids focused drilling upside
- High working interest and operatorship in Assets by the
Company ensures control over optimizing operating costs and capital
expenditure schedule to control operating costs and grow
margins
Acquisition Strategy of Upstream Assets
- Capitalize on the opportunity to consolidate assets in the
identified fairway, starting with this initial Acquisition with
1,750 boe/d of low decline, high netback
production3 at an attractive cash flow multiple
- Pursue pipeline of accretive acquisition opportunities in the
Western Canadian Sedimentary Basin area
- Optimize assets to maximize cashflow and offset
declines
- Review low risk development drilling opportunities on existing
land
- Utilize the base cash flow to seek and acquire additional
assets with a similar risk profile, decline curve, and cash
flow
- Pursue growth through a measured drilling program and a
targeted bolt-on acquisition of identified accretive
opportunities
Experienced Leadership Team in Cardium Fairway
- Fiddlehead team has experience in the identified fairway, has
worked on similar transactions, and has meaningful subject matter
expertise in the focus basins
- Deep understanding of commodity marketing and will manage the
product sales portfolio to mitigate downside risk, while
capitalizing on the long-term upside potential in commodity
prices
Attractive Acquisition Metrics
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Acquisition
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Acquisition
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Metrics
(Adjusted)
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Purchase
Price
|
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$22.5MM
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Adjusted Acquisition
Price2
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$20.9MM
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Production (Est. Q2
2024)
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1,750 boe/d
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$11,942 per
boe/d
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Net Operating Income
(Est. Q2 2024 Annualized)3
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$9.3MM
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2.24x
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Net Operating Income
(Est. Exit 2024 Annualized)
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$17.0MM
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1.23x
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Net Operating Income
(Est. Exit 2025 Annualized)
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$32.7MM
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0.64x
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Reserves (Working
Interest)1
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Proved Dev. Producing
(PDP)
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3.7 MMboe
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$5.69 / boe
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Total Proved
(1P)
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5.8 MMboe
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$3.57 / boe
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Total Proved plus
Probable (2P)
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7.9 MMboe
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$2.63 / boe
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PDP
NPV10%
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$34.5MM
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0.61x
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1P
NPV10%
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$50.9MM
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0.41x
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2P
NPV10%
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$69.2MM
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0.30x
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Equity Financing Details
In connection with the Acquisition, it is intended that, among
other things: (i) Fiddlehead will consolidate its common shares
("Fiddlehead Shares") on a 2 to 1 basis ("Share
Consolidation") prior to the satisfaction of the Escrow Release
Conditions; (ii) the Subscription Receipts will be converted into
Units; (iii) all the outstanding common shares of FinanceCo
(including the Underlying Shares) (each, a "FinanceCo
Share"), will ultimately be exchanged for common share of
Fiddlehead (the "Fiddlehead Shares") on a basis of one
Fiddlehead Share for one FinanceCo Share; and (iv) the
Underlying Warrants will ultimately be exchanged for Fiddlehead
Warrants on a basis of one Fiddlehead Warrant for one Underlying
Warrant on equivalent terms.
Fiddlehead and FinanceCo will grant to the Underwriters an
option (the "Underwriters' Option") to offer up to an
additional number of Subscription Receipts equal to 15% of the
Subscription Receipts raised in the Offering, at any time up to 48
hours prior to the closing of the Offering.
The net proceeds of the Offering to be used to fund the Purchase
Price of the Acquisition, and for general corporate and working
capital purposes.
The gross proceeds of the Offering, less the expenses of the
Underwriters and 50% of the Underwriters' cash commission, will be
deposited and held by a licensed Canadian trust company or other
escrow agent (the "Escrow Agent") mutually acceptable to the
Underwriters and the Company in an interest bearing account (the
"Escrowed Funds") pursuant to the terms of a subscription
receipt agreement to be entered into on the Closing Date among
FinanceCo, the Company, the Underwriter, the Escrow Agent. The
Escrowed Funds (less any remaining costs and expenses of the
Underwriters) will be released from escrow to the Company upon
satisfaction of the following conditions (collectively, the
"Escrow Release Conditions") no later than the
90th day following the Closing Date, or such other date
as may be mutually agreed to in writing between the Company and the
Underwriter (the "Escrow Release Deadline"), including:
(A)
|
the completion,
satisfaction or waiver of all conditions precedent to the
Acquisition in accordance with the Definitive Agreement, to the
satisfaction of the Underwriters, including the closing of the
Credit Facility to fund the Acquisition;
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(B)
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the completion of the
Share Consolidation;
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(C)
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the receipt of all
required shareholder and regulatory approvals, including, without
limitation, the conditional approval of the TSXV for the Listing
(as defined herein) and the Acquisition;
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(D)
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the Fiddlehead Shares
issued in exchange for the Underlying Shares and Warrant Shares not
being subject to any statutory or other hold period in
Canada;
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(E)
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the representations and
warranties of Fiddlehead and FinanceCo contained in the
underwriting agreement to be entered into in connection with the
Offering being true and accurate in all material respects, as if
made on and as of the escrow release date; and
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(F)
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Fiddlehead and
FinanceCo and the Underwriters having delivered a joint notice and
direction to the Escrow Agent, confirming that the conditions set
forth in (A) to (E) above have been met or waived.
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As a condition precedent to the execution by the Underwriter of
the joint notice and direction referred to in (F) above, the chief
executive officer of the Company and FinanceCo (or such other
officers as may be acceptable to the Underwriters, acting
reasonably) will certify to the Underwriters that the Escrow
Release Conditions (other than that set out in (F) above) have been
satisfied.
If (i) the satisfaction of the Escrow Release Conditions does
not occur on or prior to the Escrow Release Deadline, or such other
date as may be mutually agreed to in writing among Fiddlehead,
FinanceCo and the Underwriters, or (ii) the Company has advised the
Underwriters or the public that it does not intend to proceed with
the Acquisition (in each case, the earliest of such times being the
"Termination Time"), then all of the issued and outstanding
Subscription Receipts shall be cancelled and the Escrowed Funds
shall be used to pay holders of Subscription Receipts an amount
equal to the issue price of the Subscription Receipts held by them
(plus an amount equal to a pro rata share of any interest or other
income earned thereon) ("Required Refund"). If the Escrowed
Funds are not sufficient to satisfy the Required Refund to the
holders of the then issued and outstanding Subscription Receipts
(plus an amount equal to a pro rata share of the interest earned
thereon), it shall be Fiddlehead's and FinanceCo's sole
responsibility and liability to contribute such amounts as are
necessary to satisfy any such shortfall.
In connection with, and as a condition to, the completion of the
Acquisition, the Fiddlehead Shares (including those issued in
exchange for the Underlying Shares, Warrant Shares and issuable
pursuant to the warrants and options of Fiddlehead) will be listed
on the TSXV (the "Listing"). In addition, the Company will
use commercial reasonable efforts to obtain the necessary approvals
to list the Fiddlehead Warrants on the TSXV.
The securities to be issued under the Offering will be offered
by way of private placement in each of the provinces of
Canada and such other
jurisdictions as may be determined by Fiddlehead, FinanceCo, and
the Underwriters, in each case, pursuant to applicable exemptions
from the prospectus requirements under applicable securities
laws.
The Offering is expected to close on or about the week of
July 29, 2024 (the "Closing
Date"), or such other date as agreed upon between Fiddlehead,
FinanceCo and the Underwriters and will be subject to certain
conditions set out in the agency agreement of the Offering.
In connection with the Offering, the Underwriters will receive
an aggregate cash commission equal to 8.0% of the gross proceeds
from the Offering. Upon the satisfaction or waiver (to the extent
waiver is permitted) of the Escrow Release Conditions, the
Underwriters will also be issued broker warrants (the "Broker
Warrants") equal to 8.0% of the number of Subscription Receipts
sold under the Offering. Each Broker Warrant shall be exercisable
to acquire one Unit (or the equivalent thereof in securities of
Fiddlehead) at an exercise price equal to the issue price of the
Subscription Receipts for a period of 60 months following the
satisfaction or waiver of the Escrow Release Conditions.
The securities described herein have not been, and will not be,
registered under the United States Securities Act of 1933, as
amended (the "U.S. Securities Act"), or any state securities
laws, and accordingly, may not be offered or sold within
the United States except in
compliance with the registration requirements of the U.S.
Securities Act and applicable state securities requirements or
pursuant to exemptions therefrom. This press release does not
constitute an offer to sell or a solicitation to buy any securities
in any jurisdiction.
Management Team of
Fiddlehead
Brent Osmond, Chairman
President & CEO - Biography found
above
Ron Hornseth, Chief Operating
Officer
Mr. Hornseth is a professional engineer with over 25 years of
experience in the upstream oil and gas industry. Prior to joining
Fiddlehead Ron held the role of GM Canada for TransGlobe Energy
(now VAALCO Energy Inc.) where he ran their Canadian Business Unit.
Ron has extensive expertise in asset development, business
development, capital planning, reservoir engineering and reserves
management both in Canada and
internationally. Prior to TransGlobe Ron held roles of increasing
responsibility with Perpetual Energy and Baytex Energy focusing on
asset management and business development. Ron is a member of the
Association of Professional Engineers and Geoscientists of
Alberta (APEGA) and the Society of
Petroleum Engineers (SPE). He graduated from the University of Alberta with a Bachelor of Science
(Mechanical Engineering) degree.
Ying Yuen, Chief Financial
Officer
Mr. Yuen is a chartered accountant with over 30 years of
experience in private and public companies in the energy sector. He
was a founding shareholder and chief financial officer of two
successful start-up private oil and gas companies. He has extensive
experience in debt and equity financings. Mr. Yuen also
has extensive experience in financial reporting, accounting, and
taxation. He graduated from the University of
Calgary with a Bachelor of Commerce degree.
Jim Shepherd, Vice President,
Land & Business Development
Mr. Shepherd played professional hockey in the United States and Europe for ten years. Upon retiring, he
completed a Bachelor of Arts degree at the University of Calgary and has worked as a mineral
land negotiator and consultant for both public and private
companies since 2008. Mr. Shepherd is an active member of Canadian
Association of Petroleum Land & Energy Professionals.
R.W. (Ron) Shepherd, Vice
President, Exploration
R.W. (Ron) Shepherd has been
involved in the Canadian petroleum and mining industries for more
than 40 years, serving as a founder, officer, and director of
several private and publicly traded companies. He is currently the
President of Grand Prix Energy Ltd., a private oil and natural gas
company based in Calgary,
Alberta. Mr. Shepherd is a graduate of Queens University in Kingston, Ontario with an
undergraduate degree in geology and a master's degree in business
administration.
William (Bill)
de Jong, Corporate Secretary
William (Bill) de
Jong is a lawyer in the Capital Markets group with
international law firm DLA Piper LLP, with a focus on the natural
resources and energy sectors. Bill maintains a practice
specializing in the areas of securities (regulatory and stock
exchange compliance), mergers and acquisitions (M&A) and
corporate finance. He acts for issuers and dealers in both domestic
and cross-border debt and equity financing transactions, and also
assists clients in public and private M&A transactions. In
addition to his private practice, Bill sits as a board of director
in a variety of contexts (public [TSXV, CSE, CBOE], private, and
not-for-profit entities), has experience advising special
committees and acting as independent counsel to boards in unique
circumstances.
Additional Information
Additional information concerning the Acquisition will be
provided in subsequent news releases and in Fiddlehead's listing
statement to be prepared and filed in connection with the
Acquisition, which will be available under Fiddlehead's SEDAR+
profile at www.sedarplus.ca.
Completion of the Acquisition is subject to a number of
conditions, including but not limited to, TSXV acceptance and, if
applicable pursuant to TSXV requirements, the satisfaction or
waiver of all conditions precedent in the Definitive Agreement and
closing conditions customary to transactions of this nature. There
can be no assurance that the Acquisition will be completed as
proposed or at all.
Investors are cautioned that, except as disclosed in the filing
statement to be prepared in connection with the Acquisition, any
information released or received with respect to the Acquisition
may not be accurate or complete and should not be relied upon.
The TSXV has in no way passed upon the merits of the Acquisition
and has neither approved nor disapproved the contents of this press
release.
Neither the TSXV nor its Regulation Services Provider (as
that term is defined in the policies of the TSXV) accepts
responsibility for the adequacy or accuracy of this
release.
Cautionary Note Regarding Forward Looking Information
This press release contains forward-looking statements and
forward-looking information within the meaning of applicable
securities laws. Any statements that are contained in this press
release that are not statements of historical fact may be deemed to
be forward-looking statements. Forward-looking statements are often
identified by terms such as "may", "should", "anticipate", "will",
"estimates", "believes", "intends" "expects" and similar
expressions which are intended to identify forward-looking
information or statements. More particularly and without
limitation, this press release contains forward looking statements
and information concerning: the Acquisition; the proposed structure
by which the Acquisition is to be completed; the Company's
anticipated use of the proceeds of the Offering, including
satisfaction of the Purchase Price; closing of the Offering;
financial and operating forecasts with respect to the Assets; the
Company's intention to exploit the reservoirs and the Company's
long term business strategy with respect to the Assets and Listing
on the TSXV. Fiddlehead cautions that all forward-looking
statements are inherently uncertain, and that actual performance
may be affected by a number of material factors, assumptions and
expectations, many of which are beyond the control of Fiddlehead,
including expectations and assumptions concerning Fiddlehead, the
Acquisition, the timely receipt of all required TSXV and regulatory
approvals and exemptions (as applicable) and the satisfaction of
other closing conditions in accordance with the terms of the
Definitive Agreement. The reader is cautioned that assumptions
used in the preparation of any forward-looking information may
prove to be incorrect. Events or circumstances may cause actual
results to differ materially from those predicted as a result of
numerous known and unknown risks, uncertainties, and other factors,
many of which are beyond the control of Fiddlehead. The reader is
cautioned not to place undue reliance on any forward-looking
information. Such information, although considered reasonable by
management at the time of preparation, may prove to be incorrect
and actual results may differ materially from those anticipated.
Forward-looking statements contained in this press release are
expressly qualified by this cautionary statement.
Statements relating to "reserves" are deemed to be
forward-looking statements, as they involve the implied assessment,
based on certain estimates and assumptions, that the reserves
described exist in the quantities predicted or estimated and that
the reserves can be profitably produced in the future. There are
numerous uncertainties inherent in estimating quantities of crude
oil, natural gas and NGL reserves and the future cash flows
attributed to such reserves. The reserve and associated cash flow
information set forth above are estimates only. In general,
estimates of economically recoverable crude oil, natural gas and
NGL reserves and the future net cash flows therefrom are based upon
a number of variable factors and assumptions, such as historical
production from the properties, production rates, ultimate reserve
recovery, timing and amount of capital expenditures, marketability
of oil and natural gas, royalty rates, the assumed effects of
regulation by governmental agencies and future operating costs, all
of which may vary materially. For these reasons, estimates of the
economically recoverable crude oil, NGL and natural gas reserves
attributable to any particular group of properties, classification
of such reserves based on risk of recovery and estimates of future
net revenues associated with reserves prepared by different
engineers, or by the same engineers at different times, may vary.
Fiddlehead and the Assets' actual production, revenues, taxes and
development and operating expenditures with respect to their
respective reserves will vary from estimates thereof and such
variations could be material.
The forward-looking statements contained in this press release
are made as of the date of this press release, and Fiddlehead does
not undertake any obligation to update publicly or to revise any of
the included forward-looking statements, whether as a result of new
information, future events or otherwise, except as expressly
required by securities law.
Throughout this news release and in other materials disclosed by
the Company, we employ certain measures to analyze financial
performance, financial position and cash flow. These non-GAAP and
other financial measures do not have any standardized meaning
prescribed by IFRS and therefore may not be comparable to similar
measures provided by other issuers. Non-GAAP and other financial
measures should not be considered to be more meaningful than GAAP
measures which are determined in accordance with IFRS, such as net
income (loss) and cash flow from operating activities as indicators
of our performance.
The following are non-GAAP financial measures: capital
expenditures, free funds flow, net operating income, net operating
expenses and operating netback and operating netback. Where
applicable, these non-GAAP financial measures are presented on a
multiple, per boe or a per share basis resulting in non-GAAP
financial ratios. These non-GAAP financial measures and ratios are
not standardized financial measures under IFRS and might not be
comparable to similar financial measures disclosed by other
issuers.
Management feels net operating income is a key industry
benchmark and measure of operating performance of the Company that
assists management and investors in assessing the Company's
profitability and is commonly used by other petroleum and natural
gas producers. Net operating income is calculated as petroleum and
natural gas revenue less royalties, transportation and operating
expenses.
The Company calculates "Adjusted Purchase Price/PDP NPV10%" by
dividing the Adjusted Purchase Price by the net present value of
the proved developed producing reserves discounted at 10%,
"Adjusted Purchase Price/Proven NPV10%" by dividing the Adjusted
Purchase Price by the net present value of the proven reserves
discounted at 10%, "Adjusted Purchase Price/Proven + Probable
NPV10%" by dividing the Adjusted Purchase Price by the net present
value of the proven and probable developed producing reserves
discounted at 10%, "Adjusted Purchase Price/PDP" by dividing the
Adjusted Purchase Price by the estimated proved developed producing
reserves, "Adjusted Purchase Price/Proven" by dividing the Adjusted
Purchase Price by the estimated proven reserves and "Adjusted
Purchase Price/2P" by dividing the Adjusted Purchase Price by the
estimated total proved plus probable reserves.
Oil and Gas Advisories
Reserves estimates in this press release in respect of the
Acquisition are based on the evaluations prepared by GLJ Ltd.,
as independent qualified reserves evaluator, as set out in the
Strachan/South Ferrier Report effective as at December 31, 2023, which was prepared in
accordance with National Instrument 51-101 and the COGE Handbook
("COGEH"). The reserves or future net revenue were made
assuming that development of each property in respect of which the
estimate is made will occur, without regard to the likely
availability to the reporting issuer of funding required for that
development.
This press release contains estimates of the NPV of the
Company's future net revenue from reserves associated with the
Assets and assets acquired pursuant to previously completed
acquisitions, as applicable. Such amounts do not represent the fair
market value of such reserves. The recovery and reserve estimates
provided herein are estimates only and there is no guarantee that
the estimated reserves will be recovered. The NPV of the respective
assets' base production is a snapshot in time and is based on the
reserves evaluated using the applicable pricing assumptions
described above. The NPV is calculated using a discount rate of
10%, on a before tax basis and is the sum of the present value of
proved plus probable developed producing reserves based on the
applicable pricing assumptions. It should not be assumed that the
undiscounted or discounted NPV of future net revenue attributable
to the respective assets represents the fair market value of those
assets. The estimates for reserves for individual properties may
not reflect the same confidence level as estimates of reserves for
all properties due to the effects of aggregation. The recovery and
reserve estimates of crude oil, NGL and natural gas reserves are
estimates only and there is no guarantee that the estimated
reserves will be recovered. Actual reserves may be greater than or
less than the estimates relied upon for NPV calculations,
herein.
Abbreviations:
bbl
|
=
|
barrels
|
bbl/d
|
=
|
barrels of oil per
day
|
Bbbl
|
=
|
billions of
barrels
|
boe
|
=
|
barrels of oil
equivalent
|
boe/d
|
=
|
barrels of oil
equivalent per day
|
Mbbl
|
=
|
thousands of
barrels
|
Mboe
|
=
|
thousand barrels of oil
equivalent
|
mcfpd
|
=
|
thousand cubic feet of
gas per day
|
MMboe
|
=
|
million barrels of oil
equivalent
|
PDP
|
=
|
proved developed
producing
|
1 Strachan/South Ferrier reserve report effective December
31, 2023, prepared by GLJ Ltd. in accordance with National
Instrument 51-101 and the COGEH
|
2 The
Adjusted Purchase Price is the Purchase Price of $22.5 million less
estimated interim adjustments of approximately $1.6
million
|
3 Comprised
of 153 bbl/d of oil, 400 bbl/d of NGLs, and 7,183 mcf/d
of natural gas during the estimated period in the second quarter of
2024
|
THIS PRESS RELEASE, REQUIRED BY APPLICABLE CANADIAN LAWS, IS NOT
FOR DISTRIBUTION TO U.S. NEWS SERVICES OR FOR DISSEMINATION IN
THE UNITED STATES, AND DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO SELL
ANY OF THE SECURITIES DESCRIBED HEREIN IN THE UNITED STATES. THESE SECURITIES HAVE NOT
BEEN, AND WILL NOT BE, REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR
SOLD IN THE UNITED STATES OR TO
U.S. PERSONS UNLESS REGISTERED OR EXEMPT THEREFROM.
This news release shall not constitute an offer to sell or the
solicitation of an offer to buy any securities in any
jurisdiction.
SOURCE Fiddlehead Resources Corp.