Petrolia Energy Corporation (OTCMKTS:BBLS) Files An 8-K Entry into a Material Definitive AgreementItem 1.01 Entry into a Material Definitive Agreement.
Effective on June 29, 2018, Petrolia Energy Corporation (the “Company”, “we” and “us”), acquired a 25% working interest in approximately 41,526 acres located in the Luseland, Hearts Hill, and Cuthbert fields, located in Southwest Saskatchewan and Eastern Alberta, Canada (collectively, the “Canadian Properties” and the “Working Interest”). The Canadian Properties currently encompass 64 sections, with 240 oil and 12 natural gas wells currently producing on the properties. Additionally, there are several idle wells with potential for reactivation and 34 sections of undeveloped land (approximately 21,760 acres).
The Canadian Properties were acquired from Blue Sky Resources Ltd. (“Blue Sky”), whose President is Ilyas Chaudhary, the father of Zel C. Khan, the Company’s Chief Executive Officer. Blue Sky is the largest shareholder of the Company.
Blue Sky had previously acquired an 80% working interest in the Canadian Properties from Georox Resources Inc., who had acquired the Canadian Properties from Cona Resources Ltd. and Cona Resources Partnership prior to the acquisition by the Company. The effective date of the acquisition was June 1, 2018.
The acquisition of the Canadian Properties was evidenced and documented by a Memorandum of Understanding between the Company and Blue Sky dated June 29, 2018 and a Conveyance between the parties dated as of the same date, to which the Company agreed to acquire the Working Interest in consideration for $1,428,581 in Canadian dollars (“CAD”) (approximately $1,089,150 in U.S. dollars) of which CAD $1,022,400 (approximately $779,478 in U.S. dollars) was paid in cash (the “Cash Payment”) and CAD $406,181 (approximately $309,672 in U.S. dollars) was evidenced by a promissory note (the “Acquisition Note”).
The Cash Payment was made with funds borrowed by the Company to the terms of that certain $1,530,000 May 9, 2018, Amended and Restated Loan Agreement entered into with our wholly-owned subsidiary, Bow Energy Ltd (“Bow”) and a third party (the “Loan Agreement” and the “Lender”). The amount owed under the Loan Agreement accrues interest at the rate of 12% per annum (19% upon the occurrence of an event of default) and is due and payable on May 11, 2021.
The Working Interest is held in the name of the Company’s newly formed wholly-owned Alberta, Canada, subsidiary, Petrolia Canada Corporation.
The Acquisition Note, which was dated June 8, 2018, bears interest at the rate of 9% per annum, beginning on August 1, 2018 and is due and payable on November 30, 2018, provided that we have the right to extend the maturity date for a period six months with 10 days’ notice to Blue Sky, in the event we pay 25% of the principal amount of the Acquisition Note at the time of extension.
The foregoing description of the Memorandum of Understanding, Conveyance and Acquisition Note, do not purport to be complete and are qualified in their entirety by reference to the Memorandum of Understanding, Conveyance and Acquisition Note, copies of which are attached as Exhibits 10.1, 10.2 and 10.3, respectively, to this Current Report on Form 8-K and incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The description of the Acquisition Note above inItem 1.01is incorporated by reference into thisItem 2.03in its entirety.
Item 8.01 Other Events
On July 6, 2018, the Company issued a press release discussing the matters disclosed in Item 1.01 above, which press release is included herewith as Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits
| Exhibit No. | Description |
| 10.1* | Memorandum of Understanding between Blue Sky Resources Ltd. and Petrolia Energy Corporation dated June 29, 2018 |
| 10.2* | Conveyance between Blue Sky Resources Ltd. and Petrolia Energy Corporation dated June 29, 2018 |
| 10.3* | CAD $406,181 Promissory Note by Petrolia Energy Corporation in favor of Blue Sky Resources Ltd. dated June 8, 2018 |
| 99.1** | Press release dated July 6, 2018 |
* Filed herewith.
** Furnished herewith.
Petrolia Energy Corp ExhibitEX-10.1 2 ex10-1.htm MEMORANDUM OF UNDERSTANDING Petrolia Energy Corporation 8-K Exhibit 10.1 MEMORANDUM OF UNDERSTANDING Between Blue Sky Resources Ltd And “Petrolia” June 29,…To view the full exhibit click here
About Petrolia Energy Corporation (OTCMKTS:BBLS)
Petrolia Energy Corporation, formerly Rockdale Resources Corporation, is a domestic oil exploration and production company. The Company focuses on new oil wells in established areas of oil production. It is focused on acquisitions in the Southwest United States. The Company’s core area of operations is in the Minerva-Rockdale Field in Rockdale, Texas. The Company’s lease position offers the potential for approximately 100 new drilling locations. The Minerva-Rockdale Field is located approximately 30 miles Northeast of Austin and approximately 50 square miles in size. The main producing formation for this field is the Upper Cretaceous Navarro Group of sands and shale’s. The Company’s Slick Unit Dutcher Sands (SUDS) Field consists of approximately 2,600 acres located in Creek County, Oklahoma. Twin Lakes San Andres Unit (TLSAU) Field is approximately 50 miles from Roswell, Chavez County, New Mexico and consists of approximately 4,870 acres with over 130 wells.