Petrolia Energy Corporation (OTCMKTS:BBLS) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement.
On May 29, 2020, Petrolia Energy Corporation (the “Company”, “we” and “us”), acquired a 50% working interest in approximately 28,000 acres located in the Utikuma Lake area in Alberta, Canada (the “Canadian Property” and the “Working Interest”). The Canadian Property is an oil-weighted asset currently producing approximately 565 bopd of low decline light oil (~7%), with 76% of the low risk reserves and value coming from producing assets. Total 2P reserves are 4.7 MMboe with NPV10 of $68 MM. Upside potential includes low cost recompletion, workover and tighter pay opportunities. The facilities and gathering infrastructure are owned and operated, including a treatment facility with adequate capacity to accommodate growth. 3D seismic coverage over asset area helps support drilling and pool extension potential.
The Working Interest was acquired from Blue Sky Resources Ltd. (“Blue Sky”) in an affiliated party transaction as Zel C. Khan, the Company’s Chief Executive Officer, is related to the ownership of Blue Sky.
Blue Sky acquired a 100% working interest in the Canadian Property from Vermilion Energy Inc. (“Vermilion”) via Vermilion’s subsidiary Vermilion Resources. The effective date of the acquisition was May 1, 2020.
The acquisition of the Canadian Property was evidenced and documented by a Letter Agreement between the Company and Blue Sky dated December 16, 2019 and a Conveyance between the parties dated as May 29, 2020, to which the Company agreed to acquire the 50% Working Interest in consideration for $2,700,000 in Canadian dollars (“CAD”) (approximately $2,000,000 in U.S. dollars “USD”).
The Cash Payment was made with funds borrowed by the Company to the terms of certain Amended and Restated Loan Agreements (the “Loan Agreements” and the “Lenders”). The Company utilized an existing line of credit to borrow approximately $1,000,000 USD and an additional $1,000,000 USD was raised via short term bridge loan with a maturity date of January 30, 2021.
The Working Interest is held in the name of the Petrolia Canada Corporation, a wholly owned subsidiary of Petrolia Energy Corporation.
The foregoing description of the Letter Agreement and Conveyance, do not purport to be complete and are qualified in their entirety by reference to the Letter Agreement and Conveyance, copies of which are attached as Exhibits 10.1 and 10.2, 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 Loan Agreements above in Item 1.01 is incorporated by reference into this Item 2.03 in its entirety.
Item 9.01 Financial Statements and Exhibits
| 10.1* | Letter Agreement between Blue Sky Resources Ltd. and Petrolia Canada Corporation dated December 16, 2019 |
| 10.2* | Conveyance between Blue Sky Resources Ltd. and Petrolia Canada Corporation dated May 29, 2020 |
* Filed herewith.
** Furnished herewith.
Petrolia Energy Corp Exhibit
EX-10.1 2 ex10-1.htm Exhibit 10.1 December 16,…
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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.