PetroShare Corp (OTCMKTS:PRHR) entered into a letter agreement (the “Agreement”) with Phyllis Dowell, an individual, pursuant to which the Company agreed to purchase additional royalty interests in 10 of the Jacobucci wells in which the Company is currently participating as a non-operator. This purchase would increase the Company’s net revenue interest in each well by an average of approximately 2.3%. The Jacobucci wells, which are located within the Company’s Todd Creek Farms prospect, are currently being drilled and expected to be completed in late 2016 or early 2017. In exchange for the foregoing royalty interests, the Company has agreed to pay the seller $1,900,000 in cash. The transaction is scheduled to close on October 13, 2016 and is subject to certain closing conditions, including a satisfactory review of title.
The Company’s principal lender has an option under a participation agreement to acquire 50% of the Company’s interest in the royalty interests subject to the Agreement. In the event the transaction is successfully completed and the Company’s lender exercises its option, the Company’s cost and acquired interest would be proportionately reduced.
(the “Company”) granted an aggregate of 1,075,000 options (“Options”) for the purchase of common shares (the “Option Shares”) to ten officers, consultants, directors and employees of the Company under the Company’s Incentive Stock Option Plan. The Options have an exercise price of Cdn.$2.50 and a five-year term, and they are scheduled to vest 1/3 on the date of grant, 1/3 on October 31, 2016, and 1/3 on March 31, 2017. The Company is relying on Section 4(a)(2) of the Securities Act of 1933 for the grant of the Options and for the offer and sale of the underlying Option Shares.
