ROK Resources Inc V.ROK

Some People Received This Release This Morning...

[profittaker1]

ROK Resources Inc. Announces $47.25 Million Accretive Sale of Non-Core Assets, Update on Term Debt & Capital Efficiencies REGINA, SK / ACCESSWIRE / March 23, 2023 / ROK Resources Inc. (TSXV:ROK)(TSXV:ROK.WT) (the "Company" or "ROK") is pleased to announce it has entered into separate Asset Purchase and Sale Agreements (the “Dispositions”) to divest of certain non-core assets in Saskatchewan for total combined proceeds of approximately $47.25 million, which includes the sale of ROK’s non-operated 2.11685% interest in the Weyburn Unit (the “Weyburn Unit”) to Rife Resources Ltd. (“Rife Resources”) for total proceeds of approximately $44.5 million, before normal closing adjustments (the “Transaction”). Two smaller dispositions (the “Other Assets”) make up the balance of the Dispositions with total proceeds of $2.75 million, before normal closing adjustments. Weyburn Unit The Transaction will result in gross proceeds that represent ~35% of ROK’s enterprise value prior to the Transaction, while the divestiture of ~450 boe/d accounts for ~11% of its corporate production and ~21% of its 2022 net operating income. Notably, at the time of the asset acquisition, as described in the press release dated March 7, 2022 (“FCL Acquisition”), the Weyburn Unit represented ~15% of the total production and ~28% of annualized net operating income that was acquired, but the gross proceeds from the Transaction represent ~77% of the total purchase price of $58.0 million, net of closing adjustments, of the FCL Acquisition. The effective date of the Transaction is January 1, 2023. Completion of the Transaction is subject to customary conditions, which may include the approval of the TSX Venture Exchange (“TSXV”). Closing of the Transaction is expected to occur on March 31, 2023. Transaction Metrics Transaction Value $44.5 million Production(1) 450 boe/d Implied Production Multiple $98,889 / boe 2023 Net Operating Income (“NOI”)(2)(3) $9.6 million Implied NOI Multiple 4.6x (1) Production based on estimated next twelve months. (2) Per McDaniel Reserve Report dated December 31, 2022. (3) The term NOI is a non-IFRS measure. Please refer to the “Non-IFRS Measures” section below for further details. Strategic Rationale Consistent with ROK’s previously announced strategy, the Transaction divests significant non-core, non-operated assets, and will allow the Company to focus on its core properties, which provide significant growth potential via 172 undrilled locations. The $44.5 million in cash proceeds from the Weyburn Unit, before normal closing adjustments, will be accretive to existing shareholders of the Company by immediately eliminating 90% of ROK’s outstanding senior term debt which will result in interest savings of ~$5.8 million. By June 2023, the Company’s senior term debt is expected to be paid off entirely, providing the Company with incremental cashflow of ~$2.5 million per month, that can be deployed into organic drilling in its core Southeast Saskatchewan and Kaybob assets. “We are very proud of what the ROK team has accomplished in the last twelve months. After closing the FCL Acquisition with ~3,000 boe/d and $46 million net debt, to currently producing greater than 3,750 boe/d with $15 million of net debt (at closing of the Dispositions), we are well positioned to execute a robust development plan through the second half of 2023. We look forward to offering full 2023 guidance at closing”, said Cam Taylor, Chief Executive Officer and Chairman. Other Assets The Other Assets include: (i) ~5,000 net acres of fee title land in Southwest Saskatchewan, and (ii) ~40 boe/d of noncore production, for total proceeds of $2.75 million. The proceeds will be as allocated to working capital for the Company’s upcoming 2023 drilling program, details of which are to come in a subsequent press release. The closing of the disposition of the Other Assets is subject to customary conditions and expected to occur within the coming days. Capital Efficiency Update Management’s expertise in the sector, specifically growing companies through the drill bit, combined with in-depth knowledge of their existing asset base, has allowed ROK to complete an efficient drilling and recompletion program since the FCL Acquisition. In 2022, the Company added greater than 1,100 boe/d of production, to replace its ~22% base decline, and exited the year with production in excess of 3,500 boe/d. The 2022 drilling and recompletion program was primarily focused on developing existing light oil pools and extending play areas to add new drilling inventory. The table below is a summary of the Company’s 2022 capital efficiencies: Gross Locations Net Locations Average Gross IP30 (boe/d) Average Net IP30 (boe/d) Total Net Capital (M) 24 14.9 112 Boepd Capital Efficiency ($/boe/d) 53 Financial Advisors $22.6 $17,865 Echelon Capital Markets acted as financial advisor to the Company with respect to the Transaction. McDougall Gauley LLP acted as legal advisor to the Company with respect to the Transaction. About ROK is primarily engaged in exploring for petroleum and natural gas development activities in Saskatchewan and Alberta. It has offices located in both Regina, Saskatchewan, Canada and Calgary, Alberta, Canada. ROK's common shares are traded on the TSX Venture Exchange under the trading symbol "ROK". For further information, please contact: Cameron Taylor, Chairman and Chief Executive Officer Bryden Wright, Chief Operating Officer Jared Lukomski, Senior Vice President, Land & Business Development Phone: [phone] Email: [e-mail]

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