Decklar Resources Inc. (TSX-V: DKL) (OTCQX: DLKRF) (FSE:
A1U1) (
the “Company” or “Decklar”) is
pleased to announce the closing of a funding agreement with San
Leon Energy Plc (“
San Leon”) whereby the
previously announced Subscription Agreement will be completed for
gross proceeds of US$7,500,000 (of which US$750,000 was previously
paid as a refundable deposit) with US$4,750,000 paid immediately
and US$2,000,000 to be paid by April 30, 2022.
As detailed below, in
2020, the Company announced that San Leon had conditionally agreed
to advance US$7,500,000 by way of a loan to Decklar’s wholly-owned
subsidiary, Decklar Petroleum Limited (“Decklar
Petroleum”). San Leon also announced that it was
subscribing for a 15% equity interest in Decklar Petroleum in order
to participate in the Oza Oil Field in Nigeria. San Leon advanced
an initial deposit of US$750,000 at the time of the agreement, with
US$6,750,000 of San Leon’s proposed loan remaining
in escrow and to be released upon satisfaction (or waiver)
of certain conditions precedent. Delays were experienced
in concluding conditions precedent to the San Leon transaction, and
Decklar proceeded to complete the re-entry and testing of the Oza-1
well. Based upon the Oza-1 well test, which indicated positive oil
results from two zones and gas in a third zone, San Leon has
agreed to advance the additional funds and to proceed with its
investment in Decklar Petroleum. Decklar has agreed to modified
terms to proceed with the arrangement with San Leon and to involve
San Leon in future development planning.
Accordingly, the
parties have agreed to amendments by way of a binding letter of
intent (“Binding LOI”) and have committed to
implement the amendments to the definitive documents. The principal
terms of the Binding LOI are as follows:
1. San Leon has agreed
to proceed with its 15% equity investment in Decklar Petroleum,
waiving the remaining conditions precedent.
2. Of the US$6,750,000
of funds currently held in escrow, US$4,750,000 will be advanced to
Decklar and the remaining US$2,000,000 will be returned to San
Leon. San Leon is obligated to either advance a further
US$2,000,000 in Decklar by April 30, 2022 or, alternatively, accept
a pro rata reduction in its shareholding in Decklar Petroleum.
3. San Leon has agreed
to waive its option to invest in an additional 15% equity interest
of Decklar Petroleum and will also no longer provide the second
planned loan of US$7,500,000 in Decklar.
4. Decklar Petroleum
has agreed that San Leon will be fully involved in the planning and
determining the location of the first new well to be drilled on the
Oza Oil Field.
Subscription Agreement
As previously announced, in 2020 Decklar entered
into a subscription agreement (the “Subscription
Agreement”) with San Leon, an AIM listed public company
focused on Nigerian production and development assets, which is
arm’s length to the Company (within the meaning of the policies of
the TSX Venture Exchange). The Subscription Agreement entitles San
Leon to purchase US$7,500,000 of 10% unsecured subordinated loan
notes of Decklar Petroleum (the “Loan Notes”) and
1,764,706 ordinary shares (“Decklar Petroleum
Shares”) of Decklar Petroleum (representing 15% of the
share capital of Decklar Petroleum) for a cash consideration of
US$7,500,000 and N1,764,706, respectively. In addition, Decklar
Petroleum and San Leon had the right to enter into an option
agreement (the “Option Agreement”) that would have
entitled San Leon to purchase an additional US$7,500,000 of Loan
Notes (the “Option Loan Notes”) and 2,521,008
Decklar Petroleum Shares (resulting in an additional 15% of the
share capital of Decklar to San Leon) for cash consideration of
US$7,500,000 and N2,521,008, respectively. San Leon has now agreed
to terminate the right to enter into the Option Agreement.
The Subscription Agreement provided for certain
conditions precedent to be confirmed prior to finalizing and
issuing of the Loan Notes and Decklar Shares, including entering
into an agreed form of shareholders’ agreement in respect of
Decklar and the restructuring of certain historical indebtedness by
the owner/operator of the Oza field, Millenium Oil and Gas Company
Limited (“Millenium”), to the satisfaction of San
Leon at its sole discretion. Concurrently with entering into the
Subscription Agreement, San Leon advanced US$750,000 as an initial
deposit (the “Deposit”) with the release of the
balance of the US$7,500,000 being subject to the satisfaction (or
waiver) of the conditions precedent contained in the Subscription
Agreement. All of the conditions precedent have now been satisfied
or have been waived by San Leon. The terms of the shareholders’
agreement provide San Leon with the right to nominate up to two (2)
nominees to the board of directors of Decklar Petroleum
(“Decklar Petroleum Board”), with Decklar having
the right to nominate up to four (4) nominees to the Decklar
Petroleum Board. The shareholders’ agreement provides that certain
fundamental decisions in respect of Decklar Petroleum require the
approval of 75% of the votes eligible to be cast at a directors’
meeting, including approval of the annual business plan and budget
and the incurrence of any expenditure outside of the ordinary
course in excess of US$200,000.
Loan Notes
The terms of the Loan Notes provide for an
interest rate of ten (10)% per annum, which accrues on a quarterly
basis and will have a maturity date that is five (5) years from the
date of issuance. No payments (whether on account of interest or
principal) are required under the Loan Notes unless there are
available funds from operations of the Oza Oil Field (after taking
into account any required debt servicing payments, general and
administrative expenses, approved joint venture capital and
operating costs required to be funded by Decklar Petroleum under
the terms of agreements with Millenium, taxes and other statutory
payments) (the “Available Funds”). 75% of
available Funds shall be applied to the payment of interest and
principal in respect of the Loan Notes until they are repaid in
full. Decklar Petroleum also has the right to voluntarily prepay
the loan prior to maturity without penalty. The Loan Notes are
unsecured, subordinated and contain customary events of default.
The Loan Notes do not contain any financial or other maintenance
covenants.
The transactions contemplated by the
Subscription Agreement and Binding LOI are subject to final
approval by the TSX Venture Exchange.
For further information:
Duncan T. BlountChief Executive Officer Telephone: +1 305 890
6516Email: dblount@decklarresources.com
David HalpinChief Financial Officer Telephone: +1 403 816
3029Email: david.halpin@decklarresources.com
Investor Relations: info@decklarresources.com
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in policies
of the TSX Venture Exchange) accepts responsibility for the
adequacy or accuracy of this release.
Cautionary Language
Certain statements made and information
contained herein constitute "forward-looking information" (within
the meaning of applicable Canadian securities legislation),
including entering into definitive agreements in respect of the
amendments contemplated by the Binding LOI. All statements in this
news release, other than statements of historical facts, are
forward-looking statements. Such statements and information
(together, "forward looking statements") relate to future events or
the Company's future performance, business prospects or
opportunities. There is no certainty that definitive agreements in
respect of the Transaction will be entered into, or that any
conditions precedent contained therein will be satisfied on terms
satisfactory to the parties or at all.
All statements other than statements of
historical fact may be forward-looking statements. Any statements
that express or involve discussions with respect to predictions,
expectations, beliefs, plans, projections, objectives, assumptions
or future events or performance (often, but not always, using words
or phrases such as "seek", "anticipate", "plan", "continue",
"estimate", "expect", "may", "will", "project", "predict",
"potential", "targeting", "intend", "could", "might", "should",
"believe" and similar expressions) are not statements of historical
fact and may be "forward-looking statements". Forward-looking
statements involve known and unknown risks, uncertainties and other
factors that may cause actual results or events to differ
materially from those anticipated in such forward-looking
statements. The Company believes that the expectations reflected in
those forward-looking statements are reasonable, but no assurance
can be given that these expectations will prove to be correct and
such forward-looking statements should not be unduly relied upon.
The Company does not intend, and does not assume any obligation, to
update these forward-looking statements, except as required by
applicable laws. These forward-looking statements involve risks and
uncertainties relating to, among other things, changes in oil
prices, results of exploration and development activities,
uninsured risks, regulatory changes, defects in title, availability
of materials and equipment, timeliness of government or other
regulatory approvals, actual performance of facilities,
availability of financing on reasonable terms, availability of
third party service providers, equipment and processes relative to
specifications and expectations and unanticipated environmental
impacts on operations. Actual results may differ materially from
those expressed or implied by such forward-looking statements.
The Company provides no assurance that
forward-looking statements will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such statements. Accordingly, readers should not
place undue reliance on forward-looking statements. The Company
does not assume the obligation to revise or update these
forward-looking statements after the date of this document or to
revise them to reflect the occurrence of future unanticipated
events, except as may be required under applicable securities
laws.
Decklar Resources (TSXV:DKL)
Historical Stock Chart
From Feb 2024 to Mar 2024
Decklar Resources (TSXV:DKL)
Historical Stock Chart
From Mar 2023 to Mar 2024