Did not invest past my initial position, pretty much a write off at this point so I'm sticking around for the ride.
CALGARY, Alberta, March 01, 2016 (GLOBE NEWSWIRE) -- Quattro Exploration and Production Ltd. (TSX-V:QXP) ("Quattro" or the "Company") is pleased to announce the purchase of a 100% interest in the El Cedro License, Block 6-2012 in Guatemala, consisting of approximately 34,723 hectares in the South Peten Basin, from GFI Petroleum (Guatemala) Limited, a Guatemalan subsidiary of an oil and gas exploration and production company residing in the British Virgin Islands (the "Acquisition").
The purchase price for the acquisition is CDN $5,470,000, to be paid through the issuance of 50,000 non-voting, Class C, series 3 Preferred Shares at a deemed price of $100 per share ("Preferred Shares") and the assumption of $470,000 in liabilities related to current work in progress. Closing is scheduled to occur on or before May 1st, 2016.
The Preferred Shares are priced at $100 per share and pay an annual preferred dividend of $3.50 per share. The holder will have the right on the anniversary of the 2nd year of issuance to convert the Preferred Shares into Class A common shares at a ratio of 40 Class A shares for each Preferred Share converted, valuing the Quattro Class A common shares received on conversion at a deemed price of $2.50 per share.
Summary of the Acquisition
| Acquisition: | Block 6-2012, 34,723 hectares in the South Petn Basin (the "Block"), was issued on January 2, 2015 for a term of 25 years; an Exploration and Exploitation License with an option to extend for a further 15 years to a total of 40 years. |
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| Potential: | 3 independent seismically defined structures, supported by adjacent wells producing 35º API oil, having initial average production rates during the first 360 days of over 1,600 barrels per day and primary recoveries of over 3,000,000 barrels per well. The primary targets range in depth from 1,000 meters to 3,000 meters, with historic recovery factors in the region of more than 25%. |
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| | The discovered petroleum initially in place "PIIP" estimated for the Block is 147 million barrels**, primarily light oil in Coban 13, C17-19, Cretaceous carbonates, with porosity of 11% that have become highly deformed, resulting in a secondary enhancement of the porosity and permeability characteristics of the reservoir in the region. Additionally, the undiscovered petroleum initially in place "PIIP" has also been estimated at 100 million barrels**, within the Coban A and D as well as the Todos Santos Formation. |
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| Facilities: | Access to established and maintained pipelines to local and international markets. |
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| Additional Potential: | Regional (i) consolidation (ii) re-entries and (iii) 2D seismically defined potential with a material opportunity to increase reserves through the application of proven 3D seismic imaging techniques and a comprehensive exploitation drilling program. |
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| **Internally estimated by the Company as defined under NI 51-101 and the COGE handbook |
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"In 2015, the Company’s petroleum and natural gas book value grew at a constrained and measured pace to $48 million, representing a competitive carrying value of less than $5.00 per boe, including long term decommissioning liabilities." said Leonard B. Van Betuw, President and CEO of Quattro. "The combination of 5 previously announced incremental and accretive acquisitions in Canada in the past 12 months funded through the issuance of non-voting Class C preferred shares at a deemed value of $100 per share, and today’s announcement of the material acquisition of the El Cedro License in Guatemala is a testament to Quattro’s business plan and our capacity to deliver tangible growth during one of the most adverse periods in time for the energy industry worldwide."
"Upon the closing of the Guatemalan Acquisition, Quattro’s lands in Canada and Guatemala of 423,380 (net) acres in combination with Quattro’s 85% (net) owned and operated facilities with a capacity to process and deliver more than 36,000 (net) boe per day, positions the Company to competitively grow within the context of current market conditions. The economic exploitation of Quattro’s combination of proven, probable and un-booked recoverable resources total an estimated (based on volumetric calculations and a primary recovery factor of 15%) 150 million barrels**. Quattro’s current asset base as summarized in the Company’s March, 2016 Corporate Presentation, represents the assembly of more than 10 years of economically viable inventory of diversified resources to grow to 40,000 boe per day, funded from cash-flow. A growing production base, set to accelerate upon only a modest recovery in commodity prices in 2016."
"Currently, Quattro’s production of 2,040 boe per day represents a year-over-year growth of 150%. On an unaudited basis at year end 2015, reserves are internally estimated to have grown in excess of 9.6 million boe on a fully funded 2P basis, a 160% increase in reserves, while (based on basic shares outstanding) the book value of the Company grew by more than 125% in 2016." stated Mr. Van Betuw.
"Over the past 12 months, Quattro’s operations, consolidation, and acquisition activities, delivered results through the assembly of a full suite of diversified oil and natural gas operations focused in three core regions of the Western Canadian Sedimentary Basin," said Leonard B. Van Betuw, President and CEO. "Quattro and its employees have developed into a tested and focused team. Their efforts and execution over past years have forged the foundation and capacity to deliver repeatable, material, near term, and long term growth."
**Internally estimated by the Company as defined under NI 51-101 and the COGE handbook
Please refer to our updated Corporate Presentation on our website for further information.
Financing - Update
Quattro and its Saskatchewan based institutional lender continue to work towards definitive terms for the funding of the previously announced $20 million term debt financing (the "Debt Facility"). Upon the successful conclusion of these negotiations, funding of the Debt Facility is anticipated to occur in March 2016.
The closing of the Debt Facility and Quattro’s continued focus on maintaining a strong balance sheet, growing cash-flow, and rational asset valuations, provide management of Quattro the capacity to focus on the business and overcoming the material detachment between the price of the Company’s Class A common shares.
About Quattro Exploration and Production Ltd.
Quattro Exploration and Production Ltd. ("QXP") is focused on the competitive execution of the exploration and development of oil and natural gas reserves in Western Canada. Our diversified core areas target a low risk production base focused on providing the Company the capacity to aggressively pursue a series of high impact exploration and development efforts in Canada and Central America. The company intends to balance this portfolio of activities to assure its shareholders that it achieves material growth in both reserves and production.