PETROSHARE CORP. (OTCMKTS:PRHR) Files An 8-K Entry into a Material Definitive Agreement

PETROSHARE CORP. (OTCMKTS:PRHR) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement.

On June 8, 2017, PetroShare Corp. (the “Company”) entered into a letter agreement (“Agreement”) with Providence Energy Partners III, LP (“PEP III”), the lender under the Company’s supplemental line of credit, and Providence Energy Operators, LLC (“PEO”), another lender and holder of an option to participate with the Company in the acquisition of the Company’s oil and gas properties. to the Agreement, PEP III agreed to modify the Company’s supplemental line of credit and the Company agreed to expand the area of mutual interest (“AMI”) established under the participation agreement between the Company and PEO dated May 13, 2015 (“Participation Agreement”). The Agreement extends the maturity date of the supplemental line of credit, including approximately $3.6 million in outstanding principal and all accrued interest, from June 13, 2017 until July 18, 2017, and increases the interest rate on the line from 8% to 10%, effective immediately. The Agreement also provides that, subject to negotiation and execution of formal documentation, the maturity date of the supplemental line of credit may be extended to December 27, 2017.

In exchange for PEP III extending the maturity date of the supplemental line of credit, the Company agreed to expand, and possibly extend, the option granted to PEO under the Participation Agreement. If the supplemental line of credit is not paid by July 18, 2017 (the “Initial Extension Date”), the option granted to PEO to acquire up to 50% of any properties the Company acquires within the AMI would be expanded and extended. Currently, the AMI covers an entire township in which a part of the Company’s Todd Creek Farms prospect is located along with a one mile boundary around the entire township. The “Expanded AMI” established under the Agreement would include the original AMI plus three and one-half additional townships in which parts of the Company’s South Brighton prospect are located and one additional township and a one-mile boundary around that township in which parts of the Company’s Northern Wattenberg prospect are located. In addition to expanding the AMI, the Agreement would extend the term of the Participation Agreement for an additional year, until June 1, 2019.

The Company and PEO also granted PEP III, subject to execution of formal documentation, an option to participate in acquisitions within the Expanded AMI. If the supplemental line of credit is not paid in full by the Initial Extension Date, each of the Company’s and PEO’s option under the Participation Agreement would be reduced to 45% and, subject to certain minimum acreage requirements, PEP III would obtain an option to acquire up to 10% of any properties the Company acquires within the Expanded AMI. PEP III’s option would be in effect so long as the supplemental line of credit remains outstanding.

If the supplemental line of credit is repaid by the Initial Extension Date, the AMI established under the Participation Agreement would still be expanded, but to a lesser extent. In addition to the original AMI, the “Limited Expansion AMI” would include any new acreage acquisitions within any actual or proposed drilling spacing unit not to exceed 1280 acres which includes, or is in an adjacent section that includes, acreage currently owned by the Company in townships within which the Company’s South Brighton or Northern Wattenberg prospects are located. The option in favor of PEO within the Limited Expansion Area would terminate on the original termination date, May 13, 2018.

The parties have agreed to work in good faith to negotiate and execute definitive documents to implement the terms and conditions of the Agreement prior to the Initial Extension Date. The summary of the Agreement is qualified in its entirety by reference to the Agreement, a copy of which is attached to this report as Exhibit 10.1.

Item 9.01 Financial Statements and Exhibits.

See the Exhibit Index at the end of this report for a listing of the exhibits filed with this report.


About PETROSHARE CORP. (OTCMKTS:PRHR)

PetroShare Corp. is an independent oil and natural gas company. The Company focuses on acquisition, exploration and development of crude oil and natural gas prospects. Its properties are located in Colorado. It has interest in over two gross wells and approximately 3,100 gross acres of oil and gas properties. It has interests in over two crude oil and natural gas prospects, including Buck Peak prospect, which is located in Moffatt County, Colorado, and Todd Creek Farms prospect, which is located in Adams County, Colorado. Its working interest position in the Buck Peak prospect is concentrated in one 672-acre section, including over two drilled wells. It focuses on acquiring acreage and development of the Todd Creek Farms prospect. Its focus in both prospects is the Niobrara formation, which is a calcareous shale rock formation varying from 200 to 1,500 feet in thickness and extending from Canada to New Mexico with the oil and natural gas concentration located in Colorado and Wyoming.

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