Highbank Resources looks to acquire Montana oil assets
2021-08-10 17:59 ET - News Release
Mr. James Place reports
HIGHBANK SIGNS LETTER OF INTENT WITH INTEGROUS ENERGY PARTNERS OF AUSTIN, TEXAS
Highbank Resources Ltd. has executed a non-binding letter of intent (LOI) for the company to acquire 100 per cent of Integrous Energy Partners (IEP), a private company headquartered in Austin, Tex.
The proposed transaction represents a strategic shift for Highbank. It is intended to reposition Highbank into the favourable energy sector as a conventional oil producer. IEP's assets, specifically the Nisku conventional oil project, part of the prolific Williston basin, is located in Roosevelt county, Montana. The project has existing production wells and drill ready targets in the Nisku formation with additional potential "stacked" zones throughout the area.
Nisku highlights
- IEP controls over 40,000 acres in the prolific Williston basin prospective for vertical conventional drilling and is drill ready.
- Conventional low risk vertical drilling -- no fracking required.
- IEP geological and seismic team has modelled development using state-of-the-art geological and geophysical scientific approaches which include aeromagnetics, 2-D and 3-D seismic, and well control.
- Existing Nisku fields have seen initial potential production rates (IPs) greater than 500 barrels of oil per day with average estimated ultimate recoverables (EURs) over 500,000 barrels. Initial production rates are not necessarily indicative of long-term performance or ultimate recovery.
- IEP will drill offsetting its own existing production wells and in neighbouring Nisku fields where IEP controls interests.
- Very attractive decline profiles: cash flow positive below $30 per barrel based on current well modelling.
- Expert management and land team have over 60 years operating and leasing experience in the Williston basin.
- Stacked pay provides opportunity for future development and existing production will hold all acreage at all depths.
"We are pleased to have reached an agreement with Integrous Energy Partners," stated Jim Place, president and chief executive officer. "This acquisition is a good opportunity for the company, and our current shareholders will still maintain the upside of our current assets."
"This transaction allows IEP to take the next step in the journey to become a public company focused on oil exploration and production," said Benjamin Jacobson III, interim CEO of Integrous Energy Partners. "We look forward to working with the Highbank team to complete this transaction and build shareholder value through oil production."
Transaction benefits
- Both IEP and HBK believe the transaction will provide numerous benefits to both companies' shareholders.
- HBK shareholders maintain the upside of their current assets.
- The combined company will be drilling for oil in the prospective Williston basin with favourable oil market conditions.
- The combined company will be financed for a drill-ready program.
- The combined company will have an influx of additional seasoned oil industry experts and management.
The transaction
The terms of the LOI include the creation of a subsidiary within HBK which will hold the existing Swamp Point North (SPN) property assets and liabilities. Finalizing of the formal agreement is conditional on the combined company raising funds to a minimum of $5-million to be used for drilling of wells, general legal and regulatory fees, working capital including management costs, financing for the subsidiary, payment of certain existing HBK liabilities, and other administrative expenses.
There is potential that the agreement will be considered a change of business and/or a reverse takeover for HBK which will necessitate approval by the TSX Venture Exchange, shareholders of HBK and other regulatory authorities. Approval by the shareholders of HBK will require a special and annual general meeting (SAGM) to be held soon after a formal agreement is signed, and other details are finalized in the information circular. A record date will be set for certain matters as noted below, and a second record date setting the SAGM. Additions to the board of directors and a consolidation of existing shares will be proposed in order to attract investment financing for the new IEP project.
The proposed transaction is expected to be completed in October, 2021, or such later date as the parties may agree.
Note: Any proceeds from the sale of SPN will be used to pay existing debt holders of HBK, convertible debenture and other loan interest, current and long-term liabilities, related party management fees etc., and the remainder will be considered for disbursement to HBK shareholders as of the record date.
Qualified person
Michael S. Ratway, PE, a registered petroleum engineer, is the qualified person under National Instrument 51-101 -- Standards of Disclosure for Oil and Gas Activities who has reviewed and approved the technical content of this news release.
The qualified person has not completed sufficient work to verify the historical information on the properties.
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